It's been a long, hard road for the local resale home market since the 2008 recession burst the real estate bubble. Since 2010, area realtors have repeated a common refrain: "slow and steady." The activity finally seems to be picking up in a meaningful way, and we are firmly in a balanced market, with some areas of the region even tipping into more of a seller's market for the first time since 2008.
On The Bay asked local realtors to provide insights into today's market, and to go one step further, offering concrete advice on navigating the complexities of buying and selling real estate in the post-recession, digital age.
Understanding today's local real estate market
Today's real estate market is more complex than ever, especially given Southern Georgian Bay's unique demographics and the impact of technology on buying and selling a home. Here's a look at how the market is shaping up and some of the issues both buyers and sellers are facing.
Sales are Strong
Area real estate sales in Southern Georgian Bay have been extremely strong, setting back-to-back records in terms of dollars sold in both 2013 and 2014. Total dollar sales of area homes exceeded $600 million in 2014 - the highest dollar figure ever, representing a 9 per cent gain over 2012, according to the Multiple Listing System (MLS) of the Southern Georgian Bay Association of Realtors (SGBAR).
"Despite a dismally slow start to 2014 due to the severe winter weather we experienced last year, the demand for area properties was not impacted," says Rick Crouch, a broker with Royal LePage Locations North in Collingwood. "The final three-quarters of 2014 saw robust sales activity, resulting in total MLS sales for the year of $705 million - a 12 per cent increase from 2013 and a new annual MLS sales milestone for the area."
Following a low point in sales during 2009 following the 2008 recession, area real estate activity has steadily rebounded in each of the following years. Since 2011, annual MLS unit sales have increased on average by over five per cent per year. "MLS unit sales in 2014 of 2,208 properties again marked a five per cent increase over the number of MLS sales in 2013 and 19 per cent more than what sold in the dark, post-recession days of 2008."
Luxury Homes Drive the Numbers Up
"The 2014 increase in MLS dollar sales of 12 per cent compared to the unit sales increase of 5 per cent stems from the fact that we continue to see a strong demand for properties priced in the upper end of the market," says Crouch. "Many factors help to define the upper end or luxury property market segment; however, from a monetary value we consider any home or condominium priced above $750,000 in our market to be in that category."
MLS sales in our area above $750,000 in 2014 totaled 79 properties, an increase of 44 per cent over 2013. Similarly, sales over $1 million were up 33 per cent in 2014, with a total of 32 MLS sales reported. "Properties of this value typically take longer to sell, and are often on the market two or three years before attracting a willing buyer," notes Crouch. "Many buyers in the upper end of the market often prefer to, and have the financial ability to, custom build whatever they want versus buying a resale property that does not fully meet their tastes or needs."
As a result, this segment of the market also has a much higher level of inventory listed for sale - Crouch estimates that the current number of homes for sale above $750,000 represents a 23-month supply.
It's a Balanced Market
With the exception of the upper end of the market, 2014 saw an ongoing reduction in the overall amount of available real estate listed for sale. "Strong sales activity combined with a reduction of new MLS listings coming to market resulted in fewer properties for buyers to choose from," says Crouch. During 2014, a total of 5,986 new MLS listings came to market, a five per cent reduction in the number of properties listed during the prior year. The number of expired MLS listings also dropped 11 per cent in 2014, "stemming either from old listings finally getting sold or sellers simply choose to remove their unsold properties from the market," explains Crouch. During 2014, one out of every 2.7 properties listed for sale actually sold, compared to one out of every 3.2 properties listed for sale in 2013. "This overall improvement in the sales-to-listing ratio has resulted in balanced market conditions, levelling the playing field for buyers and sellers alike," says Crouch.
Condos are Hot
Area condominium sales posted a 19 per cent gain in 2014. "Notwithstanding the fact that many buyers in the area are looking for the maintenance-free lifestyle that condominium living provides, condominiums can offer a more affordable alternative to single-family home ownership, especially for first-time buyers," explains Crouch.
For example, the average condo sale price in Collingwood in 2014 was $222,450, while the average single-family home in Collingwood sold for $349,900.
Buyers Don't Have to Buy
To quote Dr. David Foot, author of the seminal book, Boom, Bust Echo, "real estate is affected more by demographics than it is by economics." This is especially true in Southern Georgian Bay, where today's real estate buyers are often making a real estate purchase as a discretionary decision versus one of necessity.
"Few are moving here for work purposes," notes Crouch. "Many are making a purchase here for recreational purposes with, perhaps, a longer term notion of retiring here. The bottom line is, they don't have to buy anything. They can and often do take months if not years in making a decision to buy. Above all, they do not have to overpay, nor will they."
Crouch advises sellers to be mindful of pricing their property to ensure it is "in the market" compared to other similar homes that have sold, versus being simply "on the market."