escarpment | market watch
Our
Spring Forecast
Calls for continued demand with a lack of inventory.
Desmond von Teichman Broker of Record, Owner, Royal Le Page Locations North Realty, Brokerage
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lifestyle qualities but a lower average sales price. The thought was that answering the question “where will I go if I sell” by giving people some options may increase inventory. What I am finding so far is that people have roots here. They have friends, their kids are involved in the community, their parents live nearby, etc. What will get people off the fence will be money. If prices continue to rise because demand remains so strong, I have no doubt that a certain cadre of people will capitalize on the market as the numbers are just too compelling. I do not think we have hit that magical threshold for a lot of people (yet). The spring market may well change that. We shall see. As for the next part of the straw poll, where are buyers coming from and what kind of demographic do they fit into? I was surprised a bit by the answer. My supposition was that everyone was coming from the Greater Toronto Area (GTA). Indeed, almost 100% of the realtors that responded to my little poll said they had buyer clients from the GTA. The Golden Horseshoe was a close second: Kitchener, Waterloo, Cambridge, Guelph, London. Those markets are also on fire and people have been cashing out and moving North. The surprise for me was that almost half
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arlier in the winter I was seeing an unusual amount of market activity. The first quarter of the year is traditionally pretty quiet in the real estate market. Inventory is low and so is buyer activity. It is kind of like a winter hibernation. And like a hibernation, things usually wake up in the spring and the market cuts loose. It probably will not surprise you to know that so far, 2021 has not followed the same path. While we have not seen a massive increase in inventory, we have also seen no slackening of the demand. We have gone from 4.3 months of inventory in Q1 2020 to just 1.2 months of available inventory in the first quarter of 2021. And prices are doing what you would expect them to as a result. Because the trading activity is unusual by the standards of the season, I did a quick straw poll with my people to get a snapshot of the market. I asked about where the inventory we were getting was coming from and where the buyers were coming from and their demographics. Both responses were
interesting and reinforce my opinion that we are in for more of the same in the short-term. I assumed that when you see average sale prices increasing in the 30% range (annualized) that you are going to get some folks that will take advantage of that and sell their real estate. After all, with the increases we have seen in the last while, this can be a once in a lifetime equity event for a person or a family. Southern Georgian Bay’s average sale price has increased 86% since 2016. That is almost double in five years! If you bought a house for just over $500,000 back then, it could be worth almost $1,000,000 now! And remember folks—if it is your registered primary residence, that gain is tax free. Half a million dollars after taxes is lifechanging money for some. Why then have we not seen a great exodus from the market that would create additional inventory? It can be summed up in one sentence “Where will I go if I sell?” Fair enough. The same thing that makes people want to move here makes people want to stay here. I have invited colleagues from other areas into our weekly brokerage meeting to talk about the markets in North Bay, Midland, and other parts of Grey County. Areas that have similar
