In my previous post COVID-19 Where Do We Go From Here?, I provided some information on what has transpired in the Southern Georgina Bay real estate market since the last significant recession we experienced back in 2007/2008. The purpose of this was to review how the local market has performed over the years and to guess and or forecast what impact the COVID-19 virus and recent stock market collapse might have on real estate moving forward in 2020 and beyond. In this post I will share with you my experience selling my own personal home at a time when the market was in a somewhere similar environment as we are today.
Over the years I have owned eight houses all of which were my principal residence. The incident in particular that I am referencing herein pertains to the sale of one of my homes in Collingwood. This was back in 1992 when both Canada and the U.S. was in the midst of a significant recession. Similar to today, the price of oil had plunged reaching a low in 1992 of less than $18 per barrel, the low thus far in 2020 is not much better at around $20 per barrel. At the same time, the U.S. was also recovering from what was known as the Savings and Loan Crisis when about 1,043 out of 3,234 financial institutions in the U.S. failed. Sounds like an early version of the 2007/2008 financial crisis in the U.S. doesn’t it?
I was not a licensed real estate Broker at the time. I had a corporate job and was running a U.S. based manufacturing company in Barrie yet I lived in Collingwood. In early 1992, after successfully managing and growing the company’s Canadian business unit for five years, I was asked to take on the role of Vice President, Marketing and Sales for the entire company based in Chicago. With 1,000 employees and sales of $100 million U.S., this was a great career opportunity but it was not an easy decision to pack up my family and move to a foreign country. My son and daughter, 2 and 4 years old at the time were both born in Collingwood, it was home. Just months earlier my son had undergone open heart surgery. In addition, my parents had retired to Collingwood and moving hundreds of miles away taking their only two grandchildren with us was not a popular move. Nonetheless, we decided it was just too good an opportunity to pass up, we could always move back and it would be a great adventure.
In April 1992 I assumed my new role in Chicago living in a company supplied apartment while my wife and kids remained in Collingwood to sell our house. For the most part I commuted weekly (by air) between work and home, We had purchased our home outside Collingwood near Blue Mountain for $160,000. It was a new build that we bought “as is” so for the five years we were there I did some work finishing interior trim, building a deck, adding landscaping etc. We listed the house for sale at the then market price of $299,000 so we stood to see some good appreciation in value.
As time went on and given the economic environment at the time, there were few if any potential buyers looking at our house or any other real estate in the area for that matter. We were clearly victims of a lingering recession. Despite a couple of price reductions and a change in REALTORS with a new For Sale sign nothing changed, the real estate market was essentially in hibernation.
After a year of unsuccessfully selling our house while continuing what was becoming a very tiring commute and hard on my family, the company President made me an offer. “Blow off your house at whatever price it will take to sell and the company will pick-up the difference.” Done! After twelve months the house had been reduced from $299,000 to $180,000 and we sold it for $145,000 or $15,000 less than what we had paid not including the cost of improvements we had made. On paper it is the only house I have ever lost money on. Thankfully the company I worked for made up the difference in selling price, reimbursed me for the currency exchange I paid on the Canadian money I took to the U.S. and they paid all of my legals and moving expenses. Overall we did okay despite the difficult economic circumstances that Canada and the U.S. were in at the time. Other than an economic slowdown, the similarity between then and now pretty much ends there, there was no global pandemic!
The Southern Georgian Bay region had very different characteristics back then. Collingwood still had some manufacturing plants but for the most part is was a ski town. At the time it was even marketed as “The Ski Capital of Ontario.” Blue Mountain had their slide ride in operation for the summer along with a couple of small water slides but otherwise it was pretty much dead out there once the snow melted. Collingwood, the Blue Mountains and Wasaga Beach were not the popular retirement communities that they are today. There were few doctors in town and few big retail stores like Canadian Tire, Walmart, Metro, Home Depot or others. Private golf courses such Oslerbrook, the Georgian Bay Club and Lora Bay did not exist. Once summer was over, Wasaga Beach was the opposite of Blue Mountain. It went dormant for the winter just as Blue Mountain and Collingwood were ramping up for the arrival of the winter ski crowd.
The point of all this is, we are not the same place that we were back in the recessionary period of the early 1990’s when I was forced to fire sale my house to dispose of it. Incidentally 27 years later, those same buyers still reside there. The Southern Georgian Bay region has been transformed not only into a full four season recreational area but it is also now one of the most attractive places in Canada for people to retire to. In addition, it has become a primary place for people to relocate their families in search of a better lifestyle. They have not been drawn here for work in the fast food or service industry. Rather, technology is allowing them to work from home and they can go to the Greater Toronto Area (GTA) once or every other week as may be needed.
This transformation has significantly changed the dynamics and drivers of our real estate market and in turn, I believe this has positioned us to better weather the current circumstances we find ourselves in. Again I will refer back to the quote I mentioned in my prior post by Professor David Foote, “….real estate is affected far more by demographics that it is by economics.” Only time will tell if Professor Foote and myself are right, I am willing to bet that we are. The impact of COVID-19 has yet to be fully felt either economically or in the ultimate number of people that will contract the virus or unfortunately fall victim to it. Hopefully this will serve as a wake up call for mankind. We simply cannot continue to treat this planet the way we have and not expect to feel the consequences.
While we all need a roof over our heads and a place to call home, real estate is also driven to a large degree by the presence of “willing buyers and willing sellers.” Whether it’s around Southern Georgian Bay or elsewhere, there will be consumers that have to sell and conversely there will be those that have to buy both for a variety of reasons. As a result of the demographic makeup that many of us have witnessed come about across this region in recent years however, I believe that to some degree it has reduced the number of consumers that need to follow the “must sell, must buy” criteria that is more prevalent in other markets such as the GTA. Only time will tell if this in fact will apply.
Please feel free to Contact Me if you have any questions or concerns relative to your specific real estate situation either now as we fight COVID-19 or in the months ahead.