Following two years of record sales activity across the southern Georgian Bay area with MLS® dollar sales exceeding $1 billion, real estate activity slowed in 2018 as it did in many market across the country.  MLS® sales in our region for 2018 as reported through the Southern Georgian Bay Association of REALTORS® (SGBAR) totalled $956.2 million a decrease in dollar volume of 9% and 8% for 2017 and 2016 respectively.  Further, MLS® unit sales were down 22% in 2018 versus 2017 and totalled 2,083 properties, 24% fewer than the number sold in 2016.  These results include MLS® sales of all property types including residential, commercial and farms.  (Click on each graph to enlarge).

  Personally, I watch the real estate statistics in our area and elsewhere very closely.  Our role as REALTORS® is to assist our clients in making informed and knowledgeable decisions with respect to their real estate buying and selling needs.  We need to know the numbers to best inform our clients and that is especiallyimportant when the market has shifted to a slower pace as it now has.  With both MLS® unit and dollar sales in 2018 below the levels we saw in 2017 and 2016 the question everyone is asking is why?  After reviewing all of the data for last year as well as for 2016 and 2017, I have made several observations. 

  First, we have seen the tightening up of mortgage lending rules along with the implementation of mortgage stress tests.  These changes affect first time buyers, those looking to move up to a larger property (mortgage) or renewing an existing mortgage.  Note, if you are renewing a mortgage with your current lender a stress test is not required.  This combined with the modest increase in lending rates and the implementation of a foreign buyers tax in Ontario and British Columbia all played at least some role in slowing the market down.  These steps were brought forth by both the federal and provincial governments hoping to cool very over heated markets in many areas of the country most notably Toronto and Vancouver.

  Of even greater significance is the lack of available housing inventory we have seen listed for sale over the past two to three years in our local market and elsewhere.  It is this lack of inventory couple with a strong buyer demand and low mortgage rates that has helped lead to properties listed for sale getting multiple offers and selling for over list price that has driven MLS® dollar sales and pricing through the roof while unit sales declined.  Also worth noting is the number of new homes and condominiums that are being built and these have without a doubt impacted the resale market with buyers choosing to buy “new” versus settling on a property that was 20 or 30 years old and needs updating for which they may not have the funds to do so.

   New MLS® listings in 2018 totalled 3,133 properties, a decrease of 4% from 2017 but a slight improvement from 2016 to 2017 when new listing activity fell by 5%.  Late in 2018 we saw the number of new listings coming to market increase slightly.  At the same time for sale signs lingered longer and price reductions started to emerge in our MLS® system more frequently. There were sellers who wanted to sell and buyers who wanted to buy but in many segments of the market there was still an insufficient amount of inventory to satisfy those needs.  At the same time and despite the strong market demand, the number of MLS® listings that expired increased 23% from 613 properties in 2017 to 752 in 2018.  In retrospect some sellers were perhaps too aggressive in their asking prices and their home or condo simply didn’t sell as they stubbornly refused to a price reduction. 

  In May of last year we noticed the market had started to shift.  The number of multiple offers received on properties notably diminished as did the level of sales activity where homes were selling for well over their asking price.  The tighter lending rules no doubt caused some buyers to step back and I observed many deals in our Brokerage fall apart as the result of a buyer(s) being unable to get financing.  That is not to suggest that it was the buyer’s credit rating that killed the deal.  With tighter lending rules banks and other lenders began taking a long look at the prices being paid by their buyer clients and in some cases the selling price was above the property’s appraised value.  Regardless of what a buyer is willing to pay, if their bank doesn’t see the same value then securing financing can become a real challenge.  Some buyers were also unwilling or simply couldn’t afford to get into a bidding war and stepped away.

  MLS® single family homes sales in 2018 totalled 1,375 properties, down 19% from the
1,701 homes sold in 2017.  Every municipality in our area saw a decrease in the number of MLS® sales of single family homes, the reductions ranged from 11% to 23% from the number of homes sold in 2017 and are as follows:  Clearview Township and the Municipality of Meaford were both down -11%, the Blue Mountains saw a decrease in unit sales of 19% while Collingwood and Grey Highlands both showed decreased sales of 20% each.  Lastly single family home sales in Wasaga Beach were 23% less than the number sold in 2017.  Once again I will point out that these results do not include the sale of new or soon to be built homes made by developers which not go through the MLS® system.  A good example is the Indigo Estates subdivision in Collingwood where well over 100 homes were pre-sold before work on the subdivision’s site even began.  

  Condominium sales in 2018 showed similar results with 434 units sold through MLS® compared to 523 sales in 2017, a decrease of 17%.  Of the total number of  MLS ® condo sales made in 2018, 51% were in Collingwood, 36% in the Blue Mountains, 8% in Wasaga Beach with the remaining 5% elsewhere in the area.  New condominium construction is one area of the market which remains very robust particularly in Collingwood and the Blue Mountains.  Many buyers from the Greater Toronto Area (GTA) are members of the area’s ski and golf clubs and prefer a location close to those as well as to shopping and other area amenities.  Lastly, MLS® vacant land sales of 212 units were down 39% in 2018 versus the 349 vacant land units sold in 2017 largely due to the fact that several developments were sold out and inventory of vacant fully serviced lots available to purchase was extremely limited.  I sold the same lot in the new 3rd phase of Nipissing Ridge next to the Craigleith and Alpine ski clubs three times at ever increasing prices over an 18 month period which clearly reflects the demand we were seeing in 2016 and 2017.

  One area of the real estate market that I believe requires clarification concerns pricing.  When reporting on overall real estate activity and the state of the market, media reports often include a reference to “average” sale prices.  When the “average” sale price shifts up or down for any given municipality or the area in general, homeowners always draw the conclusion that their property has appreciated or depreciated in value accordingly and that is generally not the case.  According to the Canadian Real Estate Association, at the end of 2018 the 12 month average residential sale price for our area stood at $498,804 which represented a 4.7% increase over 2017.  As stated earlier herein, home sales in all area municipalities were down significantly in 2018 versus 2017 so without further investigation an “average” sale price increase of 4.7% year-over-year should be taken lightly until the cause for such an increase has been clearly determined.  The mix of properties that have sold in any period of time has a far greater impact on the average sale price than just increases or decreases in sale prices, shifts in the economy etc.  Case in point.  In 2008 there were just two MLS® home sales in Collingwood over $750,000.  In addition to these I sold a home for over $1 million which was not listed on the local MLS® system.  In 2018 MLS® residential sales over $750,000 in Collingwood totalled 49 properties, that is essentially 25 times the number of sales over $750,000 just ten years ago.  Whether you are buying or selling, pricing needs to be looked at carefully by area and property type.  This has never been more important than now.  The market has shifted, interest rates are expected to rise and both buyers and sellers need to be informed and prepared to make the right decisions.  This is a key element of the work and analysis that we as REALTORS® need to provide our clients.

  During 2018 we continued to see a strong demand for properties in specific price segments of the market.  Sales in the $300,000 to $499,999 price range is the “sweet spot” if you will of our market with sales in 2018 totalling 861 units.  This price range is the segment where inventory has been lacking as these sales were down 15% from the 1,018 MLS® sales reported in 2017.  It is becoming increasingly difficult to find much in our market area for less than $300,000.  Sales last year between $100,000 to $299,999 were down 39% with 318 sales for the year compared to 523 in 2017.  Sales in the $500,000 to $799,999 segment remained strong in 2018 down just 7% from one year ago with 465 MLS® sales in 2018 versus 498 in the prior year.

  Where we continue to see growth in residential property sales is at the higher-end of the market, homes priced $750,000 and up.  A growing segment of the local real estate market is for luxury homes and condos.  While this part of the market softened somewhat in 2018, we still saw 189 MLS® sales reported over $750,000 in 2018, down 23% from 245 sales in this price range in 2017 but 170% more than just 82 sales over $750,000 back five years ago in 2014.  See my Luxury Home & Condominium Market Report on the Luxury Homes page of my personal real estate website for more details.                 
   As previously started we have seen an overall decrease in MLS® listing activity from 2016 through 2018.  Many sellers were prepared to sell as with a sharp increase in multiple offers, properties selling for over their listed prices and a shortage of properties for sale it was indeed a “seller’s market.”   The problem was finding a replacement home or condominium to purchase at a fair price was a tall order.  As such many sellers decided to stay put and wait until the market became less hectic.  At this time we have seen an up tick in the number of properties coming onto our MLS® system as overall activity moves towards a more balanced state, levelling the market somewhat for sellers and buyers alike.  As shown on the charts above, annual real estate activity starts to ramp up in January and typically peaks in May or June before beginning to trend downwards in early summer.  This includes both sales as well as listing activity.

Summary Conclusion

  As we head into 2019 there is every reason to remain optimistic about the demand for southern Georgian Bay area property.  We are still in the early stages of having people move to this area and there are three main reasons driving this migration.  First, the recreational amenities here has established the area as Ontario’s true four season playground.  This is attracting retirees as well as full time residents looking for an alternative lifestyle where they can essentially work from home and commute to the Greater Toronto Area (GTA) a day or two a week or as needed.  For those looking for a recreational secondary property, the choices here are many and prices are significantly more affordable than places such as Muskoka.  Home prices in Toronto have escalated to the point where even a modest entry level home is approaching the $1 million mark which makes pricing in our area looks much more favourable.

  So what’s the downside  First, sales in Toronto and other parts of the GTA have also softened no doubt for the same reason we have seen a market slow down here.  These are strong feeder markets for this area with many buyers coming from Toronto and or the surrounding area.  Interest rates have crept up and tighter lending rules have made securing financing increasingly difficult to obtain especially for first time buyers.  The good news is this has already served to slow down the crazy pace we experienced in 2016 and 2017 when multiple offers and skyrocketing sale prices were making it increasingly difficult for the average consumer to enter the market comfortably.

  Personally I remain optimistic about 2019 and beyond.  Buyers acquire property in this area because they “want” to not because they “have” to.  A slowdown in market activity can be a good thing for sellers and buyers alike.  The biggest threat perhaps looming which could impact real estate across the country is the level of debt being carried by many Canadian families.  From 2000 to  2017 real estate values across Canada have essentially tripled, far outpacing income growth.  While our economy has performed well, many economists attribute that to strong consumer spending.  Low interest (mortgage) rates have contributed to sharp increases in real estate sales and prices.  Add to this home renovation spending, the purchases of new furniture, appliances along with new vehicles etc. and the debt burden of many may have reached their limit.  Consumer debt in Canada is now said to be over $2.1 trillion.  Real estate sales in Alberta and Saskatchewan are feeling the impact of falling oil prices and General Motors decision to close their Oshawa Ontario assembly plant will affect not only GM workers but those of their various suppliers as well.    

  The fundamentals of the Canadian economy remain strong which bodes well for our real estate market moving forward.  A market correction such as what we have witnessed in 2018 can only serve to stabilize the dynamics of buying and selling real estate for consumers creating a level playing field between both buyers and sellers.  As both a REALTOR® and the owner of two properties myself I play close attention to what is going on as it is the best way for me to serve my valued clients.  I sold my own home in Collingwood last year as my significant other and I decided it was time to consolidate our real estate into one principal residence…….hers!  I already own a summer cottage and following the sale of my home we purchased together another waterfront property on which we hope to build a home in two or three years. 

  Despite a slowdown in market activity last year, I am happy to report that 2018 was a year of record sales for our Brokerage, Royal LePAGE Locations North.  Sales for our Brokerage totalled just over $288 million.  We have the highest market share in four of the five municipalities we serve, Clearview 26%, Collingwood 32%, Meaford 36%, the Blue Mountains 26% and as a relative newcomer to Wasaga Beach we have quickly become the 3rd busiest real estate office there.   

  If I can be of any help in assisting you with making your real estate buying and or selling decisions I would be delighted to share my experience and knowledge with you.  In the meantime best wishes for 2019 and I will continue to provide monthly reports on the status of real estate activity and other related matters in the months ahead.

  A full copy of my Georgian Triangle Real Estate Market Report 2018 Year In Review is available to download from my personal real estate website