2019 Market Forecast for Simcoe Region from BDAR Members
February 6th - The housing market of 2018 saw many changes. It was the year that the new mortgage rules came into play, applying a stronger stress test to people applying for a mortgage. It was a year where the crazy market of 2016 and 2017 started to level off and return to normal trends.
So, where does this leave us for 2019? The Barrie & District Association of REALTORS® (BDAR) asked a few members to share their thoughts on:
-Residential Market (Below)
-Condo Market (Page 2)
-Commercial Market (Page 3)
Geoff Halford, Past-President, BDAR Board of Directors, feels that the 2019 housing market will look a lot like it did last year with relative stability across all metrics.
He noted that the number of months of inventory (the number of months it would take to sell all of the current inventory at the current rate of sales) hovered between 4 and 5 months. Less than 4 months is a seller's market and more than 6 months is a buyer’s market, where we sit now is a balanced market.
“In looking at the median sales price during 2018, we saw slight fluctuations up and down, which is not uncommon during the course of the year,” Halford said. “The overall median price trend was level or stable in the $450,000 to $470,000 range. By comparison, in 2013 and 2014, median prices fluctuated around the $300,000 mark, so prices are still up nicely over the last 5 years in our region.”
BDAR member Peggy Hill said that the 2019 market will be dictated by how many listings become available.
“We are seeing our listings move as long as our sellers are reasonable about their list prices,” Hill said. “Buyers are very savvy and are looking for deals. Saying that, there are a lot of buyers in the system and I think we will see brisk movement January, February, and even early March. If rates continue to rise, I'm not expecting April, May, and June to be great.”
She added that in 2017, she noticed a stronger first half of the year with a weaker second half, then in 2018, it was the opposite.
“I'm expecting this year to be more like 2017: busier first half than the last half of the year,” Hill said. “Everything is very interest-rate dependent. We have buyers with pre-approvals right now that will buy in the next month or so. I still think we will have a decent year.”
Lindsay Percy, who is a member of BDAR’s Board of Directors, said that she doesn’t expect that inventory will rise dramatically.
“I expect that demand will be stable, so days on market should also stay relatively stable,” Percy said. “The spring market should see the normal increase in demand, but if that is met by a similar increase in listings, then days on market won't be drastically affected. I don't see demand being through the roof, but steady.”
Percy added that it’s not just local influences that affect the housing market.
“I feel that the adjustment to the stress test has worked its way through the market, but there continues to be a lot of uncertainty. With questions about NAFTA, global politics proving to be so unpredictable, and with the stock market taking a bit of a hit, I think that people are just being very careful about making large purchases or adjustments in their life.”
Halford noted that, when you break down the sales activity by property types, the market segment which has shown the most strength is entry-level or more affordable housing types, such as apartments and townhomes.
“These types of properties have actually seen some appreciation in price, while the overall price picture has been stable,” Halford noted. “Gains in affordable price range are being offset by some softening in the mid and upper ranges. The current market dynamic will prove favourable for owners of their first homes looking to move up. It will present the opportunity to sell in a favourable market, take their equity gains of the last few years and translate that into a solid buy on their next home.”
According to BDAR and Canadian Commercial Network (CCN) member Linda Loftus, this year should see cranes in the sky and building in the intensification areas, with many plans that have been submitted to Barrie City Hall in response to the Provinces Place to Grow mandate that Barrie achieve a certain population within its built boundaries by 2031.
“There are approximately 2,500 units being proposed with room for another 2,750,” Loftus said. “It remains to be seen if the cranes will materialize, but all indications are these projects are ready to go.”
Loftus noted that the Salem Secondary plan is also poised to have pipes in the ground in 2019, which will eventually unleash a number of new units into the market in 2020.”
It was a slow market in 2018 for Barrie condos, according to BDAR member Ashley Lamb.
"Inventory kept growing as we approached the second quarter of 2018 and buyer demand remained the same. This caused the condo market to shift into a buyer's market, which was a complete 180 from 2017."
As we approach 2019, Lamb said that we can expect more inventory.
"With condo supply in Barrie hovering around 120 units for sale for most of 2018, we are definitely entering 2019 with a healthier inventory. Buyer demand for condos could increase. If there is an interest rate hike, buyers will be looking in a lower price bracket and condos are the most affordable property type in Barrie."
Linda Loftus also discussed the commercial and industrial market. She noted that industrial demand is high, and supply is low in larger spaces over 20,000SF. There remains a resistance in the marketplace to pay $20/SF for DC's and this is stalling new builds. Rents have increased back to pre-2008 rates - a 10-year recovery.
“Retail is well serviced in the south end and provides alternative locations to those that were previously looking at Bayfield Street as the only viable retail option,” Loftus said. “Office rates are slow to creep up as the burden of operating costs/taxes are taking a large bite out of profitability to Landlords. Collier Centre though fraught with difficulties beyond rental rates is a prime example of the market resisting $23-$30/SF office rents.”
Stephanie Maye, BDAR REALTOR®, Canadian Commercial Network Member and President of Certified Commercial Investment Central Canada Chapter, said that industrial properties continue to be a highly sought-after property type both for users and investors with vacancy rate being at historic low and average lease rates creeping up to $6.33/SF.
“Part of this increase in demand comes from the retail world, where buying patterns have certainly shifted with the onset of online shopping,” she said. “Retailers are changing their approach by offering improved experiences, while storing more of their product in industrial warehousing facilities where purchases are shipped directly to consumers who have purchased electronically.”
Maye added that office properties are experiencing positive net absorption where the vacancy rate has come down from 16% last year to 12.9% by Q4 2018, a sign of gaining strength in the employment sector.
“Looking at the local economic outlook and its impact to the local industrial, commercial and investment property market, it’s important to keep in mind that rising interest rates are affecting national and regional economic forecasts. With interest rates edging up, the impact is that it slows the rate of increase in values by putting upward pressure on investment capitalization rates to compensate for the increased interest rates. Having said that, banks are still friendly to owner users who see the benefit of owning the real estate in which they occupy, and we have seen many purchases this year and foresee that trend to continue into 2019.”
Maye added there is increased interest in companies moving their operation to areas of Simcoe County.
“The primary attraction that land value is still more cost effective by as much as 65% less than our neighbours to the south,” said Maye. “Also, there used to be a sentiment that skilled labour was just not here but take one look at Hwy 400 in the morning and we all know that’s not true. Increasingly, companies are starting to see that they can save on their labour costs by moving their facilities to the area where there is a solid employee base who want to achieve a better lifestyle. Many of the companies I’m speaking with who already call Barrie and area home are busting at the seams, so I foresee there being a need to build more product, especially to a technologically advanced standard.”
With the residential market more balanced, Halford said 2019 will be a great year to buy or sell homes in the region. Using a local, professional BDAR member will help buyers and sellers get the most value out of their real estate transaction. Local REALTORS® know the area, have a network of professionals to work with, understand how mortgage rates and government regulations affect pricing, and are committed to the Greater Barrie and Simcoe County region.
The prices reflected in this media release are based on homes sold via the live Barrie and District Association of REALTORS® (BDAR) Matrix™ Multiple Listing Service (MLS®) only. Statistical anomalies in average home prices, including irregularly high and/or substantially low residential sold unit prices have been evaluated and/or removed from the data sets used to calculate final averages in order to illustrate market trends with improved accuracy.
The Barrie & District Association of REALTORS®
The Barrie & District Association of REALTORS® cautions that over a period of time the use of average price information can be useful in establishing trends, but it does not indicate actual prices in widely divergent areas or account for price differentials between geographical areas. The prices reflected in this media release are based on homes sold via the live BDAR MLS® system only.