As we near the end of February and with COVID 19 still very much a part of our daily lives now and no doubt for the foreseeable future, the question many are asking is will 2020’s real estate pandemonium extend into 2021 and beyond?

As I previously reported, MLS® dollar volume sales across southern Georgian Bay in 2020 reflected a 58% increase from 2019 and were driven in many instances by multiple offers with no conditions and properties selling for well over their listing asking prices.  COVID 19 was certainly a driving force in the demand for real estate in Collingwood and the surrounding municipalities.  Many of us in real estate have encountered a growing number of consumers that were looking to escape the Greater Toronto Area (GTA) for a change in lifestyle some of which was initiated by the pandemic itself coupled with the need and ability to work from home.

Southern Georgian Bay is not the only area of the country that is experiencing a strong demand for properties coming mostly from those that currently reside outside the local market(s).  While the level of demand is unlike many of us have ever seen and I have been a real estate Broker for over 20 years, the flip side to this is seemingly a lack of housing inventory listed for sale on the MLS® System.  This is a similar story shared via the media in many markets both here, in the GTA as well as in other parts of Canada.  Some would believe that the shortage of housing inventory listed on the MLS® System is a new issue that has attracted the media’s attention in the last year or so.  The reality is, the shortage of MLS® listed properties locally has been in progress for the past ten or more years.

Below is a chart which I prepared showing the number of active listings each year on the MLS® System of the Southern Georgian Bay Association of REALTORS (SGBAR) from 2012 through to January 2021.  For the most part, the number of active listings annually has been trending downwards for the past 10 or more years.  Other than a minor shift upwards in 2019 thru 2020 the overall trend line in red clearly illustrates the that the number of active MLS® listed properties has been declining with the odd hiccup for many years.

Following the U.S. housing bust and subsequent recession in 2007 to 2009, the real estate market in Canada did not start to rebound until 2010.  I was the President of SGBAR in 2008 and up until that time, we had experienced several years where there was an excess of housing listed for sale on the local MLS® System.  For several years, the number of expired MLS® listings annually exceeded the number of actual MLS® sales.  The level of available inventory was high and in those years, it was a Buyer’s rather than a Seller’s market.  The blue (bottom) line in the chart above reflects the number of expired listings in each given year.  The actual number of expired listings per year range from 170 to 300 which is a fairly tight range given that during these same years, the number of active MLS® listings per year dropped from a high of 1,187 in 2012 to 466 in 2020.

Also note in the chart above, the number of expired listings has recently started to move upwards 2020 to 2021.  That prompts the question with demand so high and inventory allegedly low, why are the number of expired listings on the rise?  Some will argue with me but as a Market Value Appraiser – Residential I can say with some authority that in most cases listings expire because they are over-priced.  This is particularly true when demand is high yet some properties linger on the market for months and sometimes years.  People will blame a lot of things such as a home’s location, size, condition, its overall appeal and or appearance you name it, but ultimately all of these things are a “factor of price.”  The only meaningful exception non-price related issue to a rise in expired listings is the state of the economy and the overall market locally, nationally and globally.

In 1992 we were in a widespread recession.  I was not in real estate at the time rather I had a senior management corporate job  and I accepted a promotion from my employer which necessitated a move from Collingwood to Chicago.  I listed my Collingwood home at its then fair market value of $300,000.  After over 12 months on the market and despite several price reductions the house remained unsold.  At that time and with a recession in full swing, pricing didn’t matter as no one was looking at homes much less buying.  With the blessing of my employer , I finally sold the home for $160,000 and the company made up the difference.  In short there was an ample supply of active MLS® listings for Buyers to choose, my home was appropriately priced and showed well but the market was all but dead!

Fast forward to 2012 and as per the chart above, the “median” sale price for homes in our area was just above $300,000 which is where my home was priced back in 1992.  As you will note above, the median sale price has risen steadily every year from 2012 and has more than doubled in 2020. Canada’s inflation rate have been running between 1% to 2% annually from 2012 to 2020.  Even with an average annual inflation rate of 1.5%, a $300,000 house in 2012 would theoretically be worth $330,000 to $335,000 today.  The increase in median house pricing has clearly outpaced the annual rate of inflation.  There is no question that the increased demand has had an impact but more importantly much of the increase in median residential sale prices in our area has been due to significantly more sales for homes priced over $1 million.  I speak to this with some statistical data see my luxury home blog.  In 2012 there was one sale in our market over $1 million whereas in 2020 there were 353!  You can well imagine what impact that alone has had on driving the median sale price higher.  Further, this is why as I have stated before the media’s eagerness and willingness to report on “average house prices” monthly is so pointless and misleading to consumers.

Another point worth noting herein which the media never talks about is the list-to-sale price ratio.  This number measured as a percentage is what a home sells for versus its MLS® listed price.  Example:  A home listed at $599,000 that sells for $590,000 has a list-to-sale price ratio of 98.5% rounded, calculated as $599,000 divided by $590,000  equals 98.49%.

Historically when you took the total number of MLS® sales in our market annually and calculated the overall list-to-sale price ratio for all those sales it typically ran between 95% to 96%.  Looking at the chart which I have prepared below,  you can see that back in 2012 the overall residential MLS® list-to-sale price ratio was 96.5%.  That ratio increased annually to 97.7% in 2017, it fell to around 97% in 2018 and 2019 only to rebound to 98% in 2020.  For the month of January 2021 that ratio was nudging up to 100%.  Why?  The answer to this was mentioned earlier in this post, an increase in demand resulting in multiple offers with some properties selling for well over their listed price.  I know of one sale where a home listed at $899,000 sold for $1.2 million, that’s $301,000 over the asking price so the list-to-sale price ratio is 133%.

In summary the facts are pretty clear.  In our local market as well as in others across Canada we are seeing three important factors that are all converging at the sale time.

  1. Demand for residential real estate remains high.  To a degree this is driven by low mortgage rates coupled with a growing desire with many to leave larger urban areas like the GTA and COVID 19 has also played a role in this.
  2. The inventory for MLS® listed properties has been trending downward for years on the local MLS® System and remains low.
  3. Strong Buyer demand coupled with low inventory is creating competitive market conditions driving sale prices higher and much closer to or above asking prices as demonstrated by the higher list-to-sale price ratio on the local MLS® System.  Again, it’s a Seller’s market.

The real question to perhaps ask is, is there an inventory shortage of resale properties listed for sale or is the strong market demand being met via an alternate housing supply such as new home developments?  To a large degree, I believe it is the latter and I will address this in a future post.

How long this trend remains in effect is anyone’s guess.  We all know that just like the stock market, real estate fluctuates up and down, it always has and always will.  Right now it remains a Seller’s market but like COVID 19 this too shall pass.  If anyone is thinking about selling no matter what the reason, there has never been a better time to maximize the value and the equity you have in your home, chalet, cottage or other recreational property.  Contact Me for a no obligation personal consultation on your particular real estate needs and or objective.  Email: or Direct: 705-443-1037.