Following many successive months of unit sales volume which had been lower than the prior year, the months of April and May, 2009 equalled those same months in 2008, and the months of June and July surpassed 2008 levels by 11%. The month of June was also the largest June on record in the history of the Barrie and District Association of REALTORS®.
The erosion of local volume which we have experienced over the course of the September to March period was more a result of negative radio, TV, and on-line commentators painting the entire world, including Barrie, with the plague of “buyer resistance and seller despair”. And to 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 economist’s) 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 yet 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 also fail to recognize that real estate markets are local in nature, and every community, and even neighbourhoods, are different in terms of trends and pricing. Slower (or accelerating) activity in some of Canada’s pricier and more volatile housing markets (Vancouver, Calgary, Edmonton, 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 media, 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 is 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 2008/2009 (and are therefore stable), and continue to create stellar operating results. 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 are at all time lows, and our political climate is relatively stable. 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 the early ‘90’s crash in the Real Estate Market, Life in this Canada of ours is pretty good, thank you very much!
2008/2009 Market Results-Barrie and Area
Prior to completing any comparative analysis of the year 2008 with 2009, it should be remembered that the year 2007 was the absolute best year in residential unit sales volume and average price levels 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 buyer appetite which prevailed, and to even match, let alone exceed, those results in 2008 (and 2009) represented a monumental challenge. Therefore as we moved through the final months of 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 2008 actual results were similar to those which we experienced in 2006, and that was recognized by the same media and critics as a good year!
Locally, the number of residential properties sold during the entire year of 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 year end 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.
July 31st, 2009 Market Results-Barrie and Area
While the unit volume of the first seven months of 2009 is below 2008 levels for the same period by about 194 units, this decline is all attributable to the results of the first quarter. During the period from April through July, unit volume in 2009 has in fact exceeded the same period last year by about 3%, for a year to date total volume of 2,581 units. In spite of the pressure on unit volume by a market that was being portrayed by the media and the arm-chair critics as a “buyer’s market”, prices have remained relatively strong. At the end of July, 2009, average residential prices were running at approximately $263,000 versus a prior year value at the same point of about $264,000, and as indicated above, a year-end value of the same $264,000. While the spring months are typically the leaders during any year (see graphs on the Market Statistics Page of our website, www.BarrieHomeSearch.com, the activity levels at all major brokerages are on the positive side of the ledger, and REALTORS® are generally expressing positive outlooks about the market and their personal futures. A further indication of this positive environment is the fact that there has not been any decrease in the number of members of the Barrie and District Association of REALTORS®; a phenomenon which typically occurs when the real estate market is in decline.
The number of active residential listings in July 2009 fell once again to 1,854 properties, which is about sixteen per cent below July 2008 levels. This is the third time in 19 months that active listings have fallen below year-ago levels, effectively tightening the level of choice which a buyer will encounter, while assisting in the stabilizing of average prices.
Approximately 55% 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, and these statistics are consistent with those experienced during the entire year of 2008.
My Forward Predictions for the Barrie Area Market
As we move through the balance of the year, the unit volume will continue to equal or exceed the prior year values, and prices will remain at about the same approximate values as we are currently experiencing. 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 entire area in the short and longer term.
First time buyers are the wild card in the speed at which the market will start to accelerate. Mortgage rates are at the lowest levels in decades allowing more and more of this group to 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 with a multi-level chain of ownership changes being 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.