escarpment | market watch
2020, A Year Like No
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Desmond von Teichman Broker of Record, Owner, Royal Le Page Locations North Realty, Brokerage
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economics at play right now. While this is a very simplistic approach, I do believe it illustrates what we are experiencing currently in Southern Georgian Bay. Market price for a product like a home is set by a willing buyer, a willing seller, free of duress and with adequate exposure to the market. Simple supply and demand. However, COVID, coupled with some basic market fundamentals have pushed the demand far above the available supply. For years the trend has been growth in our area. Because, who wouldn’t want to live here? We have terrific amenities, great proximity to major markets, and par excellence lifestyle. Add a pandemic that makes folks realize they can work from anywhere, and you are pouring gas on an already roaring fire. So, what is going to change? Supply? That isn’t easy. Most shovel-ready developments are getting to market as quickly as possible. I recently had a conversation with a sales team in charge of a new development—they tell me they have
5,000 people on their contact list for the project. Occupancy projection is 2-3 years away. One cannot simply wave a magic wand and produce inventory—it takes years to get a development going. And years again to build and occupy. Supply is not a short-term solution to this imbalance. So, will demand come to play and balance things out? Maybe. Will people go “back to the office” post pandemic, removing the additional work at home cohort we have been seeing of late? Maybe. Will price increases like we saw this year push some folks out of the market or move them to markets that have a lower average sale price? Maybe. There are a lot of maybes here. But I always go back to the fundamentals. People want to be here. They wanted to be here pre-pandemic, and they will want to be here post pandemic. Our area is unique, and people know it. And remember, a Toronto dollar still goes a long way here. Folks have done very well on their GTA real estate and can still pocket some dough and buy
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hat a rollercoaster 2020 has been. The year started strong, crashed to a halt in the second quarter and then bounced like a ball into the third quarter. Since then, record after record has been set. It has been a great market for sellers, but has been tough on buyers and their REALTORS®. Is there an end in sight? That is probably the most common question I get from the public, friends, family and indeed my REALTORS® at the brokerage. When you read the market stats below, you will find them incredible. Indeed, they have been. Average sale price is up 28% this year in our area. That isn’t healthy. But the market has been trending that way for a while. Average MLS® sale price has doubled in the last five years. That is a ton of equity for the average homeowner. But is it sustainable? Where will it stop? The answer is—I am not sure. Price escalations of this type cannot go on forever. However, what cools things down? In our market, we have some grade ten
