Housing prices have been climbing steadily in London-St. Thomas since even before the pandemic, but now homes in neighbouring counties are also selling well above asking price.
Royal LePage realtor Cory Hamilton, based in Kincardine, says realtors in Huron-Perth and Grey-Bruce counties started to see multiple offers, with no conditions, more often last year, and by the end of 2020 it was commonplace.
“And then starting off this year, it seems like it’s just on steroids,” he says.
“We’re seeing probably almost double the amount of offers coming in. On average, probably somewhere between seven to 15 offers on most properties, especially on the lower-end-price stuff.”
Hamilton believes several factors are involved, including refurbishments at Bruce Power increasing employment and the pandemic pushing some people to move out of larger city centres.
“Traditionally in the Kincardine, Huron-Kinloss area, we’re accustomed to seeing people coming in from the Waterloo, KW, Cambridge, that area, you know, occasionally London. But we are now seeing more and more people migrating a little bit more southwest from Toronto,” he says.
“And of course, they’re coming in with the mentality that they’re seeing in the GTA with how real estate’s been for probably almost a decade now and it’s certainly creating some challenges for the locals.”
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Statistics Canada data shows that between the beginning of July 2019 and the start of July 2020, a period that includes the early months of the COVID-19 emergency, Toronto saw 50,375 more people leaving the city for other areas of Ontario than making the opposite move.
Climbing home prices are also forecast nationwide, with the Canadian Real Estate Association’s outlook forecasting a record number of sales this year.
Its outlook also suggests the national average home price could rise by 16.5 per cent on an annual basis to just over $665,000 in 2021 and $679,341 in 2022.
For first-time home buyers, the situation can be especially frustrating.
Hamilton shared an example of prospective buyers who offered $50,000 more than the asking price, only to see the home go for almost $150,000 over. The vast majority of offers are also without conditions, he says.
Murtaza Haider, professor of data science and real estate management at Ryerson University, is concerned about how long the growth in prices can last, but he doesn’t know if there’s a bubble set to burst.
“I haven’t seen a bubble burst in housing markets since 1991 when prices really fell and in that time, the fundamentals were very different. The mortgage rate was around 18, 20 per cent. Right now, it’s actually an entirely different scenario, your mortgage rates are under two per cent right now.”
A huge drop in pricing is unlikely, he says, because little change is anticipated in the supply and demand.
Not enough homes are listed, he says, so whatever is listed is driven up by market demand. At the same time, not enough new homes are being built to account for the increase in demand and growing population.
“The odds of a bubble bursting — that everything collapses and you’re saying, ‘what will I do? My home is half the value that I bought’ — that kind of a scenario is unlikely,” he says.
The most likely scenario, he says, is that prices stop accelerating or potentially drop just three to five per cent.
–With files from Global News’ Erica Alini and The Canadian Press
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