An Interview with On The Bay Magazine
On The Bay Magazine | Interview Date: February 4, 2020 | Local News
An interview with the president of our local real estate board
For the first time since 2010, the average sales price for homes in Southern Georgian Bay surpassed the half-million-dollar mark. And the forecast suggests the new decade will continue to mean new highs. It’s not surprising that the outlook is positive; Maclean’s magazine lists Collingwood as one of the top 25 communities in all of Canada in which to live, citing demographics, culture and community, and commute as the top three reasons to call our area home. “Consumers locally, provincially, nationally and internationally continue to fall in love with our market from lifestyle and investment perspectives,” says Mike Scholte, president of the Southern Georgian Bay Association of Realtors (SGBAR). “Our area continues to be discovered as a suitable community to accommodate all stages of life combined with great infrastructure and proximity to major urban centers.”
On The Bay interviewed Scholte to get his thoughts on today’s real estate market in the SGBAR’s Western District, which includes Wasaga Beach, Springwater, Clearview Township, Collingwood, The Blue Mountains, Meaford and Grey Highlands. Here are his insights.
How would you describe the current resale home market, and why?
Mike Scholte: We’re seeing year over year growth in terms of sales and property values in the Southern Georgian Bay market. Numbers have been steady and consistent. There are indications of a balanced market, which is nice. There is a slight favouring for the seller, but it’s not outrageous as in years passed.
Sellers around here don’t have as much power as the Toronto and Vancouver markets. Here there is still a trend of buyers having choice. We are unique because if this area doesn’t work for buyers, they can try the Muskokas or Haliburton. Or if they do want to move to this area, they have choice within it. In Toronto, they don’t have as much choice; if they have to be there for work, they have to buy there. We don’t see the ‘we will buy anything’ mentality here like you do in Vancouver or Toronto.
What are some key numbers to illustrate the current state of the market?
MS: The Southern Georgian Bay Association of Realtors (SGBAR) Western District had residential sales activity of 1,997 sales in 2019, up 10.6 per cent from the same period in 2018. There were 3,484 new listings with an average of 690 active listings per month.
Important metrics for the state of the real estate market include the sales to new listing ratio and months of inventory (MOI). The sales to new listing ratio is the ratio between the number of homes sold and the number of new listings entering the market. This metric normally falls around 50 per cent during a balanced market. A higher ratio implies a seller’s market and a lower ratio implies a buyer’s market. Given that our district has a 2019 sales to new listing ratio of 57.3, we can say that we are in a balanced market with a slight tendency toward a seller’s market.
The MOI metric indicates the supply and demand relationship in the housing market. This ratio represents the number of months it would take to sell homes, based on an area’s current rate of sales activity. For example, if there are 100 listings currently on the market, and 20 properties are being sold each month, then if no new listings appeared, the inventory would be sold within five months.
A balanced market has about five or six months of inventory on the market, indicating that the supply and demand for properties in the area is equal. If there were greater than six months of inventory, it would be indicative of a buyer’s market and less then six months of inventory would be indicative of a seller’s market. The fewer months of inventory, the more competitive the market. In the Western District of SGBAR, the 2019 year-to-date MOI was 4.1, again suggesting a seller’s market.
Finally, in the Western District of SGBAR, the average sales price was $548,373 which is the highest average since 2010.
How has the market changed since last year at this time?
MS: What I love about this year is that we have more consistent numbers to base decisions on. Last year at this time we were coming out of a very sporadic market and it was harder to make pricing decisions for sellers. There was a gap in expectations between sellers and buyers. There has been a stabilization in prices and now we have proof as to where things should be priced. It is about managing expectations and people are no longer basing prices on, ‘what do the neighbours say.’
Are there differences across the Western Region? For example, between Collingwood and The Blue Mountains, Meaford, Wasaga Beach, etc.?
MS: Yes, each community has its own unique micro market within our district. Our area is geographically varied and includes town, rural, recreational, condominium and resort properties, which are unique not only in type but also location. Collingwood and the Town of The Blue Mountains see higher pricing and you might not find your starter home in those areas. It is important to be open to looking at different options. There are fabulous opportunities in some of the outlying areas like Wasaga Beach, Stayner and Meaford and people are beginning to look at these areas as suitable alternatives. As realtors, it is our job to manage clients’ expectations and as buyers we have to be realistic.
Over the last two years, our market experienced the same intensity, as did much of the Canadian real estate market, and this led to a heightened urgency with buyers and sellers but also a fear of destabilization. Several measures were put into place by the government to ‘cool’ the market, including the introduction of the mortgage stress test and more stringent income qualification for purchasers. These measures are now entrenched, and impact both selling and buying decisions. You have to be open to opportunities and ask yourself what you can afford and get for your dollars.
How are low inventory and other market forces affecting home prices in our area?
MS: Low inventory increases the pressure on potential buyers and will impact price. However, we are starting to see new development projects in all areas, and this will offer some supply relief. Buyer choice of community is likely to offset some of that pressure as well.
SGBAR’s Western District continues to experience a balanced market trending towards a seller’s market. That being said, we are finding that buyer and seller expectations have an enormous impact on the successful sale and purchase of a property. Overpriced houses do sit. It is important to listen to the numbers. Consumers have choice, no matter how low the inventory.
What are the challenges in the current market, for both buyers and sellers?
MS: Low-interest rates combined with the stability of the SGBAR market make our community very attractive to suppliers of mortgage financing; however, purchaser and seller qualification is still a challenge. There are unique and effective solutions to financing the purchase of a new home, but preparation is required. Get professional advice to make sure you are prepared. This allows you to work quicker and seek out a better experience in purchasing or in the sale of your house.
As president of the SGBAR, what is your forecast for the near-future real estate market in our area (next 12 months)?
MS: No-one is privy to a crystal ball; however, the market trends indicate the next 12 months will produce a strong market in our area. Low-interest rates, a growing economy and stable job statistics will bolster confidence. This area continues to build momentum, especially in some of the outlying areas like Stayner and Wasaga Beach. More and more we are looking at all communities, not just one, with potential buyers.
Inventory will continue to be low, but as we ramp up into the summer season I am optimistic. We had a really easy winter, because of the weather. People were able to come here to look and realtors were busy throughout the winter. More temperate winters accelerate our spring market. There seem to be a lot of potential sellers prepping houses and getting ready, and there is a lot of interest from people within the area and outside. It is reasonable to forecast growth in our real estate market. There is a robust market in Toronto, and we tend to follow urban market trends shortly after.