Contrary to the uneducated and misguided beliefs of most media sources, the local real estate industry has NOT fallen into the depths of despair.
We certainly have seen an erosion of volume over the course of the past many months, as radio, TV, and on-line commentators have attempted to paint the entire world, including Barrie, with the plague of "buyer resistance and seller despair". And let's be honest, there are some areas where that belief is definitely true, including pockets in the United States ravaged by the sub-prime mortgage debacle. But Canada is not the United States, and while we certainly depend upon them as our largest trading market, we don't depend on their banks, and we don't depend on their people to buy and sell homes here in Canada, and in particular, in the Barrie area.
The media's (and recently some aspiring economists) focus on treating national statistics as the gospel of health in this industry stems from a total lack of understanding of what this business is all about. They have to begin to understand that all real estate markets exhibit some form of cyclical effects... up and down, month to month, always have and always will. They must also recognize that real estate markets are local in nature, and every community, and even neighbourhood, is different in terms of trends and pricing. Slower (and accelerating) activity in some of Canada's pricier housing markets (Vancouver, Calgary, Toronto) compared to year-ago levels will weigh heavily on the national average prices, but should not necessarily be construed to represent the local market conditions. The press, unfortunately, do not understand this phenomenon about the real estate industry, and paint all markets with the same national brush as that which may be in evidence in these major market areas, and further rely on month to month transition values which based on seasonality and/or the impulsiveness of buyers, can skew the results. The economists look at our industry like the stock market where a specific stock or commodity has the same price whether it be purchased in Toronto, Vancouver, or St. Johns. That is simply not the case!
The political, automotive and financial uncertainties in the United States, China and Europe, have certainly caused local buyers to take a second breath before jumping into any major purchase. However, notwithstanding the recent actions of the Canadian government to provide more liquidity to the Canadian banking system, it must be remembered that here in Canada, our banks have been making record profits during 2008 (and are therefore stable), and continue to create stellar operating results during the first quarter of 2009. The sub-prime mortgage industry is for all intents and purposes a non-entity in Canada, inflation is simply not a problem, mortgage interest rates have not experienced any significant change in several years, and our political climate is relatively stable; the Conservatives having recently returned to power with a minority government but with apparent voting support from the opposition Liberals: which many say is far better than a majority government. In Barrie, one only needs to travel any one of the major thoroughfares to experience construction in process... another sign that money is flowing and people are working. For those of us who have experienced "hard times" in the past... including a crash in the Real Estate Market, Life in this Canada of ours is pretty good, thank you very much! And that must be true because I haven't seen nor heard of any reporters, business writers, nor newscasters losing their jobs.
December 31st, 2008 Market Results-Barrie and Area
Prior to completing any comparative analysis of the year 2008, it should be remembered that the prior year 2007 was the absolute best year in residential unit sales volume and average prices ever experienced in the Barrie area and throughout the entire country. "Sizzling" would be the only way to adequately describe the level of activity and appetite which prevailed, and to even match those results would have been a monumental challenge. Therefore as we entered the year 2008, outsiders, such as the media and the arm chair critics, started to make those comparisons, and the industry was perceived as being in significant trouble. In fact, our actual results were similar to those which we experienced in 2006, and that was recognized by the same media and those critics as a good year!
Locally, the number of residential properties sold during 2008 showed a decline of about 19% from 2007, but while unit volume declined, residential prices continued to increase, albeit at a moderate rate of about 2.0 % (year over year) to a current value of approximately $264,000. Of note is the fact that the "average days on the market" for all residential dwellings was unchanged during the year at 55 days.
As a result of the lower unit sales volume, inventory levels are now running about 25% above the same point as one year ago, and selection in most price points is favourable. Approximately 57% of the total sales volume in the Barrie market occurred in the range from $200,000 to $300,000, with the balance spread over price points on either side of this range.
My Forward Predictions for the Barrie Area Market
As we move through February, the unit volume continues to decline and prices are running about 1.3% below the prior year. Notwithstanding the external influences which are having a negative effect on consumer confidence (U.S. Banking, sub-prime mortgages, automotive industry solvency, job security, etc.) the continuing short supply of serviced land, increased costs in labour, building materials and municipal development charges will continue to put upward price pressure on new home construction. This will in turn, assist in dampening further erosion of current price levels in the re-sale market, in spite of the reduced demand. Properties which are priced reasonably and present themselves well, will sell better than those which are simply relying on low prices to attract a buyer. Recreational and Specialty Properties will continue to be in demand, since they have a limited supply, but will take longer to sell and/or will be sold at values lower than previously. The introduction of the GO Service to Barrie, the general affordability of the Barrie area, and the imposition of a double land transfer tax system in the Greater Toronto Market will continue to fuel unit growth in the longer term.
First time buyers are the wild card in the speed at which the market will rebound. Mortgage rates are at the lowest levels in decades making more and more of this group qualify for financing. Their influence on the market is significant since they create the initial impetus for move-up buyers to sell and then re-buy and a multi-level chain of ownership changes can be the result.
The City of Barrie has been designated by the Province of Ontario as a Growth Centre, and Buyers coming to the area can still expect to find a wide range of housing options at affordable prices With average prices at least $175,000 below comparable metropolitan Toronto values, buyers from the greater metro area will find a refreshing negotiating environment where reasonable offers are entertained by Sellers, multiple offers are the exception, and local REALTORS® work "around the clock" to bring the Agreement together.
The availability of rental housing has improved, but with mortgage interest rates at record low levels, and 95% financing available, the option to buy makes economic sense for everyone.
For further detailed information, contact Gary Grant, Sales Representative, CENTURY 21 B.J. Roth Realty Ltd., Brokerage (705) 721-9111 or email at firstname.lastname@example.org.