Playing The Game

There is a housing drought in Southern Georgian Bay, yet demand is at a record high. Where normally there are enough homes for sale to supply buyers for about seven months, there was just one month at the end of January.

The past year has been unprecedented in every way, and that includes the performance of the real estate market. In all regions of the country, people took a hard look at how and where they live, resulting in record-breaking sales and mar-ket activity. Never before has the saying that the first three rules of real estate are location, location, location been truer, and this has directly impacted the local market.

According to the Multiple Listing Service (MLS) Home Price Index (HPI), the median price of a single-family home in our region has increased by an average of 145 per cent over the last decade. Over 20 per cent of that increase happened in 2020 alone.

Rob McAleer, a sales representative with Chestnut Park Real Estate, describes the market as a “seller’s market on steroids,” while other realtors we interviewed used words like “overwhelming” and “chaotic.” So, what are the deeper factors driving the market, who are the buyers and what new trends have emerged? To find out, we interviewed several local realtors to help us delve beyond the numbers.

Who Is Buying?

It would appear that the sense many people have of buyers coming from the Greater Toronto Area (GTA) is likely accurate. When asked where residential buyers were coming from, the majority saw a split of about one-third local residents and two-thirds of people coming from outside the Southern Georgian Bay region.
The out-of-area buyers were primarily from the GTA. Asked what the profile of their buyers were over the last year, most agreed that there were few first-time buyers and fewer investors, both attributed to higher prices and a lack of available inventory for sale. By far, most realtors agreed that most of their clients were move-up buyers and people buying recreational or secondary homes.

Buyers moving here from out of the area cite common reasons we’ve heard for some time, such as the ability to enjoy a four-season lifestyle, friendly communities, less congestion, clean air and small-town charm. Others say the combination of being able to sell their homes for top dollar in larger city centres combined with historic low interest rates create an opportunity for them to own a dream home in Southern Georgian Bay. Things like green space, access to waterfront and trails as well as larger properties with privacy are commonly mentioned.

With the pandemic came new reasons. As remote-working options became more commonplace and, in some cases, permanent, several home buyers state that they now have options to live anywhere they choose rather than concentrating on workplace proximity.

“With COVID requiring workers to work from home, companies have given the green light for their staff to continue working remotely in perpetuity from wherever they want,” says Andres Paara, a broker with Royal LePage Locations North. “As a result, many are choosing to live in a region that provides a four-season lifestyle and more space to live, breathe and enjoy.” Paara adds that with volatility in the stock market, people are interested in the alternative of using their wealth for real estate investment in this area.

Janet Piotrowski, a broker with Re/Max Four Seasons Realty in Collingwood, says the combination of lifestyle and the pandemic together fueled the market to unprecedented levels.

“When I bought here five years ago, my clients and friends in the city were intrigued and talked about doing something like that down the road. Over the years, some did, but many didn’t pull the trigger until their frustration with being cooped up combined with the flexibility to work from home made it more feasible for them,” says Piotrowski. “People are craving green space, four-season outdoor activities and a simpler and quieter lifestyle – Southern Georgian Bay fits the bill perfectly!”

Heather Garner, a sales representative with Chestnut Park Real Estate, concurs that lockdowns are driving the market. “We saw a direct correlation with the lockdowns in the GTA and the movement of buyers up to our area,” she says. “Emotions were high, and we saw people driven by fear of the virus and the need for more space between them and their neighbours.” Garner also saw another new type of client emerge since the pandemic began. “We generally work with a lot of young families in subdivisions and we did have several divorces that created a need for sellers to sell their beautiful family homes, thus becoming buyers searching for smaller homes or condos.”

Jason Ruttan, a broker with Re/Max of Wasaga Beach, says that for the past 20 to 30 years, most sales in Wasaga were accredited to buyers purchasing a primary residence, but the pandemic has caused a shift. “The past year the local market rejuvenated demand for a traditional cottage property with character and it was evident that the increase in demand was largely credited to the COVID-19 pandemic.”

In Meaford, Royal LePage Locations North sales representative Mike Poetker says bidding wars have become the norm due to increased demand from retirees and new work-from-home buyers leaving larger city centres for Southern Georgian Bay.

Gerry Wayland, broker/owner of Re/Max at Blue, brings another perspective in regard to the resort market. He points out that when the pandemic first hit, the resort market crawled to a halt but since then, it has been busier than ever. As prices climb in the traditional recreational market, buyers have become more interested in resort condos in and around the Village at Blue, with price points often under $400,000.

“The more people come and enjoy the resort experience, the more they want to be part of it,” says Wayland. “They are not investors but rather, end users. They buy units for personal use and any rental income is a bonus that offsets their operating costs.” He adds that while rental revenues were way down over the last year during lockdowns, owners have a positive outlook and have not panicked as they have confidence in a return to high occupancies and revenue streams. “Inventory is at an all-time low and prices are up to where they should be.”

Sherry Rioux, a broker with Clairwood Real Estate, says travel restrictions have increased demand for property ownership in the area. “We have had huge demand, especially since COVID restricted travel plans,” she says. “People who normally would be travelling are now sticking close to home, so they want a weekend escape that they can get away to in case we experience more situations like this in future.”
She adds that with snowbirds staying home last winter, there was a shortage of available seasonal rentals, leading people to buy instead of rent. “We were shocked at how many of our tenants ended up being buyers.

Add to that, all the Burlington and Niagara people who normally skied at Ellicottville, NY but were not allowed to cross the border, so the calls came fast and furiously from that aspect of the market that we normally did not have here.”

The Condo Market

The condominium market is mirroring the detached home market, with low inventory levels, rapid sales and record price levels achieved. For some buyers, condos are seen as a way of breaking into the local market.

“Many of my condo buyers view their purchases as a way to break into the market here while they can still afford it, with an aim to sell in the city and upgrade to a larger home here within three to 10 years when they are ready to retire and move here full-time,” says Piotrowski. In the meantime, the ability to rent a condo out seasonally or full-time and the relatively maintenance-free aspect are also a draw.

Heather Garner agrees that condos continue to be popular in our area. “With an inability to travel south last winter, we saw an increase in the condo market with buyers wanting to get away from the city homes and have a recreational property. It was common to even see multiple offers on seasonal leases, and buyers were purchasing inexpensive condos, too, as they couldn’t find rentals.”

While many buyers are attracted by the relatively low price point for condos, Sherry Rioux says luxury condos over $1 million have also become more popular. “Condo developments such as Lighthouse Point became extremely hot properties,” says Rioux. “As one of the premier waterfront developments in town, the amenities and low density are a huge attraction.” She adds the desire for amenities is due to people looking for active options during the pandemic closures, for whom the “lock and go” lifestyle is appealing.

Mike Poetker says that while Meaford has fewer condos than other areas, they remain a popular choice. However, he adds the unique opinion that “Interestingly, life lease is increasingly taking a huge bite out of the condo market.” (Life lease housing has elements of both ownership and renting; while occupants are considered to be tenants with a life interest in the property, they do not own it but rather pay a monthly sum for the right to occupy the unit.)

In Wasaga Beach, Jason Ruttan points to new construction as having an impact. “Condominium sales have increased in recent years due to added new construction and increased inventory,” he says. “Based on the number of sales, this would indicate the popularity has increased. However, statistically the average buyer is still requesting a detached freehold home.” Ruttan adds that in 2020, condos represented less than 20 per cent of the total MLS residential sales in Wasaga Beach.

What Features are People Looking for in a Home Now?
Location continues to play an important role in buying decisions, with the most frequently desired features being:

• Walking distance to downtown shops, restaurants and services
• Proximity to nearby amenities such as golf courses, ski hills, beaches and trails
• Views
• Large lots with privacy

For move-up buyers, the most desired features are:

• Main floor master bedroom with ensuite
• Main floor laundry
• Gas fireplace
• Large, white kitchens
• Updated bathrooms
• Hardwood floors
• Attached garage with inside entry

“Those who are retiring tend to prefer a home that is turnkey, as most retirees have already completed a number of renovations in their younger years and rightly now deserve to move straight into their retirement home, hassle-free,” notes Ruttan. “Younger generations don’t mind and often welcome renovation projects to help make a home their own.”

Not surprisingly, most realtors we spoke with agreed, adding retirees most often search for bungalow-style homes with basements while recreational buyers express interest in everything from condominiums to country properties but in almost all cases, look for stylishly renovated, turn-key properties.

“As far as country properties go, big views still command the largest premium, followed by quality of land (acreage forest, trails, streams, ponds, privacy), character houses fully renovated or with solid bones to enjoy now and improve over time,” says McAleer. For condo buyers, most realtors agreed that as secondary home buyers typically look for units that are well renovated with views and access to on-site amenities.

As a result of the pandemic, some new trends have emerged. With more people working from home, Mike Poetker says good high-speed internet connectivity is more important than ever, and it’s often the first question buyers ask. The need to work from home has also seen other trends emerge. “With many people working from home, a home office or space to convert a room to a home office is a must,” says Heather Garner. “When gyms closed, we also saw a trend towards homes that had the ability for people to be able to work out from home; home gyms, pools, close to trails, storage for outdoor gear are all in demand.” She adds some buyers are also looking for the ultimate staycation-type properties where they have or can add a hot tub, pool, sauna, or other luxurious elements that would create a personal and private retreat.

The Role of Investors

Local realtors report that up to 30 per cent of their recent transactions involved investors or people combining investment with personal use. Almost all of those we interviewed said the demand was high based on inquiries, but prices in the last year made it difficult for investors to find properties where the numbers would work to provide them an adequate return. Investor profiles included a wide range of interests that included properties suitable for annual rentals, short-term accommodation rentals, multi-family homes, commercial and ‘fix and flip’ units.

“We have had several buyers looking for long-term rental properties as a way to invest their savings,” says Garner. “However, with prices increasing and multiple offers on every property, they weren’t able to make the numbers work right now, so we are seeing this type of buyer waiting the market out.”

Sherry Rioux adds her team has had several calls from investors looking to buy short-term accommodation (STA) qualified properties, which are hard to find. “When we do find STA eligible units, the prices have increased significantly so they weren’t affordable. There were also a few buyers looking for properties to flip, but those dwindled as prices rose once COVID hit.”

Andres Paara’s clients were more interested in longer-term investments. “The investors we represented this year were either wanting long-term residential rentals and/or commercial retail with residential buildings. The hit the stock market took in the early spring last year scared people into either getting out of the stock market or to diversifying their investment portfolios to include real estate income property that they can capitalize on with positive annual cash flow as well as long-term growth in equity.”

Wasaga Beach has seen a decrease in investors due to market conditions favouring sellers, making it hard to find properties with acceptable margins, but Jason Ruttan says investors also look to create their own opportunities. “Investors are interested in legal duplexes and multi-unit residential dwellings due to a shortage of month-to-month annual lease options in the local market. A number of very presentable, newly constructed legal duplexes have been built and the demand is there for more if investors are willing to create the product.”

What Does the Future Hold?

Realtors were united in saying that the last year was a strong seller’s market with an imbalance in supply and demand, rapidly rising real estate prices and multiple offers on many properties. They all found that buyers had a sense of urgency and sought fast closing dates on their purchases due to the pandemic and desire to escape larger urban centres. The Southern Georgian Bay region is highly desirable to all demographics and there is an increasing trend of people wanting to move here full-time. They saw an increase in demand for high-end properties and a strong desire to connect to nature.

With mass vaccination providing light at the end of the tunnel, with immigration and population growth continuing as well as a forecast of continued low mortgage rates for some time to come, local realtors expect the future of the real estate market in Southern Georgian Bay to remain strong.

“I don’t see the current market as a temporary trend,” says Janet Piotrowski. “The hardship caused by the pandemic and the exhausting duration has caused many to reflect on what is important in their lives – having more joy, less stress and a healthier lifestyle are no longer considered a luxury but a necessity and there is no better place than the Collingwood area in which to do that.”

Rob McLeer adds he expects things to cool down slightly once COVID retreats into the shadows. “However, there seems to be so much demand, COVID aside, compared to supply that we don’t anticipate much of a price correction.”

Mike Poetker is a little more cautious. “COVID has driven up prices and transactions, but when the world has a handle on it, I think prices will stabilize. I think 2021 will stay active, but 2022 could see job losses and assistance being cut off that may put entry level homes on the market and cause some price stabilization in the short term.”

Andres Paara anticipates demand and sales to remain strong through 2021 and likely for years to come. “Our region continues to be a desired and sought after four seasons destination for young families, recreational use, semi and full retired markets, regardless of COVID.”

Supply will likely continue to be a factor moving forward. “Low inventory will, unfortunately, remain an issue for the next one to two years until the majority of local new home developments have completed the larger projects currently under way and these will in turn help increase what will eventually be added resale inventory,” says Jason Ruttan.

Sherry Rioux says her team has discussed the outlook of the local real estate market at length and maintains that as long as COVID looms on the radar, people in Ontario will continue to seek the four-season resort lifestyle our area has to offer. “I don’t have a crystal ball, but we are expecting a strong 2021 with prices eventually stabilizing, although I think the prices of a few years ago are now definitely a thing of the past.”

The final word goes to Heather Garner: “I expect our market to continue to stay busy – we will always remain a popular destination. With the ability to continue to work from home, so many will be able to make the move while keeping their current jobs. With interest rates low and COVID still here, the focus for many will still be to find the perfect place to feel safe and at home. As we move forward in the next few years, I do expect prices to continue to increase but perhaps at a slower pace than they are right now. I think our area will always be one that people love and will want to move to, whether as a vacation destination, retirement home or permanent residence to raise a family; we live in the most incredible area that has so much to offer.”

Navigating the waters of this frenzied market takes patience and planning. Sellers may want to consider options such as buying before selling if the ability is there to do so. For the foreseeable future, the selling of a home will begin online, where buyers will look for things like virtual tours, 3D floorplans and aerial photos before planning a visit, so sellers will need a strong and trusted relationship with a realtor who can guide them through the complexities of marketing as well as pricing and negotiation strategies including the handling of multiple offers.

Buyers must be prepared to enter into a market where fierce competition for housing is a reality. It will take patience, nerves of steel and thick skin. They’ll need to be able to act fast, have a strong knowledge of the local market, and have a plan to deal with competing offers, home inspections and financing. Again, a trusted realtor can cut through the noise to help in making informed decisions.

While economists, pundits and industry insiders predict everything from a real estate boom to a bust, the reality is that the market is always impossible to predict. Despite the pandemic causing the biggest economic crisis in modern history, the bubble didn’t burst. It is possible that as government and lender supports end, the market could soften or stabilize. It’s more likely that markets like the one here in Southern Georgian Bay will show greater resilience as the desire to work from home, to create new lifestyles and to be part of a community continue to take priority. In the end, real estate is about home, and the future of people making a home in Southern Georgian Bay is bright. ❧