Exactly how hot is the current resale home market?
story by Janet Lees ❧ illustration by Robert Carter
What a difference a year makes! Last year at this time, the resale home market in Southern Georgian Bay was just starting to nudge its way out of several years of “slow and steady” growth, with most areas of the region in a balanced market position and some areas beginning to tip over into seller’s market territory.
Over the past 12 months, the market has taken flight, with sales running at near-record highs and supply falling to near-record lows. “That means price growth will likely heat up again heading into the spring and summer,” says Kevin Woolham, president of the Southern Georgian Bay Association of Realtors (SGBAR).
On The Bay interviewed Woolham to get his insights into today’s resale home market. His responses are based on the SGBAR’s Western Region data and in consultation with a senior economist from the Canadian Real Estate Association (CREA). The Western Region includes Wasaga Beach, Springwater, Clearview Township, Collingwood, The Blue Mountains, Municipality of Meaford and Grey Highlands.
On The Bay: How hot is the current real estate market in this area, and why?
Kevin Woolham: Sales are currently running at all-time highs. This has drawn down the supply of listings to record lows. If a hot market is defined as one where many people want to buy, but scarce supply results in competition among those buyers, then the housing market is currently hot. One thing that would make it even hotter is double-digit price growth, which we’re not seeing at this point.
OTB: Is it still a seller’s market?
KW: We make that call based on the degree to which the number of months of inventory (i.e. active listings divided by sales) and/or whether the sales-to-new listings ratio is deviating from its long-term averages. By both measures, the Southern Georgian Bay Western Region housing market is currently well into a sellers’ market.
OTB: Is it likely to be a seller’s market for the near future?
KW: Likely. The low interest rate and low dollar environment is likely here for some time yet. The demand and supply trends that have led to a strong sellers’ market in the region have been intensifying.
OTB: What are the economic reasons for the hot market?
KW: Interest rates play an important role, but low interest rates have been around for a while and aren’t enough on their own. Housing market trends that we’re seeing locally are at play throughout the Greater Golden Horseshoe and Ontario cottage country. In the Greater Golden Horseshoe, it’s a story about the ever-expanding commuter ring around Toronto, with buyers going farther and farther out to find affordable single family homes. Farther north in cottage country, hot markets seem to coincide with the lower Canadian dollar and the rise in home prices in and around the GTA. The increase in demand likely reflects the combination of American money coming here and Canadian money staying here.
OTB: What are some key numbers that illustrate the current state of the market?
KW: Some 2,099 residential properties changed hands in 2015 – a new annual record. The all-time monthly record was set last October, but the seasonally adjusted January 2016 data came in just one sale short of that all-time record, so sales momentum has carried over into 2016. There are currently fewer than four months of inventory compared to a long-run average of more than eight months of inventory.
The sales-to-new-listings ratio is currently sitting at more than 75 per cent compared to a long-run average of about 40 per cent. These are historically very tight market conditions.
OTB: Do you have any anecdotes or real-word examples illustrating the current market conditions, challenges, opportunities, etc.?
KW: In my own personal experience, there was a time when we would take buyers out to see five to 10 properties that met their criteria; they could then choose one that was the best fit and begin negotiating a purchase. If that didn’t work out, they still had other options to choose from.
Today I find myself talking to buyers about what they’re looking for and then beginning a search and/or waiting for a suitable property to come on the market. Properties in sought-after neighbourhoods and within desirable price ranges experience high-volume showings and quick sales – most buyers are financially prequalified and ready to move into action when they find a property they like.
OTB: As president of the SGBAR, how would you characterize the current and near-future real estate market?
KW: Our housing market is the hottest it’s ever been from the standpoint of market tightness, while price growth has remained muted. That said, prices have begun to heat up. 2015 was a record year for sales and 2016 could be even stronger, provided sales aren’t crimped by a shortage of properties for sale.
The average price in the region rose seven per cent year-over-year in 2015, and it’s likely this story will also be repeated in 2016. Based on current market conditions, prices may rise by even more this year.
OTB: What do sellers and prospective buyers need to know in order to navigate the current market?
KW: They should talk to and work with their local realtor. It’s a great time to be a seller, but sellers will want to make sure they’re taking full advantage of current market conditions. Local realtors will also ensure fair and knowledgeable property valuation in the current market, thus avoiding improperly priced properties.
For prospective buyers, the current market can be challenging. Buyers should work with their local realtor on strategies for making a successful bid, particularly where they may find themselves competing with other buyers.
OTB: Is there anything else our readers need to know about the current and near-future resale home market in the area?
KW: Every community in Southern Georgian Bay is unique. Readers should consult their local realtor for market conditions and home value information specific to their neighbourhood. Our realtors live, work and play in Southern Georgian Bay and have the local knowledge you simply need to know!
Read More about Real Estate in this Issue
– Real Estate Q&A
– The Game Has Changed!
– Sell, Sell, Sell!
– Ready, Set, List!
– Buying Strategies
– The Best Bidder
– Going to the Country?
– Thinking of Investing in Real Estate?
