I dusted off the crystal ball last week and have been busy calculating, comparing, charting and crunching since then to bring you my annual predictions for the year ahead in the local real estate market.
Last year’s prediction was pretty well on the money, except for the niggling matter of interest rates, when I wrote:
“By the final quarter of 2014, I’m betting that the Canadian dollar is likely to decline against growth in the U.S. economy which leads to increased exports and potential inflation and then, we’ll see a moderate increase in interest rates of around 50 basis points. I also think that the deep freeze we are experiencing means that we will have a strong spring market with pent up demand from these early months. My guess is that locally, we’ll see an increase in the number of sales this year of at least 5% with prices climbing for traditional, in-town single family homes and remaining flat in condominiums and older recreational properties.”
To find out just how accurate that was, stay tuned for my year-end review of the local market to be posted in the next few days when the final stats come in from our real estate board.
So, what lies ahead?
What the Experts Say
First, if you listen to the “experts” ( oh please tell me you DON’T listen to the Greater Fool, Garth Turner or to anything written in MacLean’s), the market is either going to crash or it will rise anywhere from 1.3 to 4%. As usual, there is no real agreement. After reading every prediction I could find including that of the Bank of Canada, Canadian Real Estate Association, Globe and Mail, CMHC, RE/MAX, Price Waterhouse and more, it’s clear to me that their numbers are usually talking about large city centers or averages that cannot be applied equally across the country. One thing they all seem to agree on however is that Ontario is having its moment with increasing exports and growing financial stability as it leads the country in real growth.
Most experts also seem to agree that compared to other major cities in the world, Toronto is still a bargain and we all know that as Toronto goes, so goes our market. I would add that our percentage increase in sales actually outstripped Toronto in the period of 2007 – 2014 which I would bet is a reflection of both demographics and growing wealth among echo boomers seeking secondary homes. The GTA is poised for another year of price appreciation in the single family resale sector and, Canada continues to be a safe haven for international investors. While there may be a “soft landing” in other areas of the country, count on this area to appreciate and grow in 2015.
Interest Rates and Mortgage Lending Rules
For how long have we been hearing that they are going to rise? Someday they will but don’t count on any big hikes ahead. 2015 is a Federal election year so you can bet they’ll do anything to avoid this and at worst, we could see a very small hike at the end of the year depending how things unfold. I’m even doubting that but rather, I wouldn’t be surprised if we see the government tighten lending regulations again to minimize the risk being posed through continuously growing consumer debt. Bigger down payments? Shorter amortizations? Lower loan to value ratios on refinancing? Count on something to crop up in this department
When we start a New Year, it is like a blank canvas in that we really don’t know what lies ahead. Will municipalities, all of whom have new councils in place, make drastic changes in policy that could affect markets one way or another? There will be an announcement of a casino in our region later this year. Where will it be and what impact might it have? What will be the result of the two-year long OPP Investigation in Collingwood and how will it play out in the media and most importantly, in the GTA? What will happen to the loonie and the price of oil? All of these pose risk or reward and can have an impact on markets but I don’t see any of these leading to a soft landing in our market in 2015.
The Bottom Line in Southern Georgian Bay
We are heading into 2015 with momentum as we ended a record-breaking year here in Southern Georgian Bay and there are no obvious forces to derail the trend. Our rental vacancy rate is about 1% and we are increasingly seeing investors jumping into our market. Our market draws from the GTA where price appreciation continues and confidence remains high. The number of new single family homes being built has declined and inventory is very tight in the urban areas – especially Collingwood and Wasaga Beach. I would expect these latter two communities will experience sellers’ market conditions for homes priced under $400,000 for much of the year in the single family home segment with average sale prices climbing more than 5% in 2015 in this sector. Meaford and the Town of Blue Mountains are likely to remain in Buyers’ market territory. Condominiums will be interesting. They are a continually growing segment of our market however, older condos without garages or storage are not appreciating while newer units with amenities suitable for full-time living and in good locations, should continue to hold value or appreciate modestly. The demand for farm land continues to push up prices on large agricultural tracts and that is likely to continue. Expect a tightening in mortgage lending rules but no significant changes to interest rates.
It’s going to be a good year.
Marg Scheben-Edey is a Broker with RE/MAX four seasons realty limited, Brokerage in beautiful Collingwood, ON. With three decades of experience, Marg is a leader in the local real estate marketplace and is ready to help guide both Buyers and Sellers in achieving their real estate goals. Email Marg