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19-May-2020

Home values staying stable despite COVID-19 pandemic


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BY MATT WEBB-SMITH — In a recent article published in the Business Section of the CBC news website titled: "Canadian home sales had their worst April in 36 years, but prices are holding steady now." Bank of Montreal economist Robert Kavcic is quoted as saying "The housing market has, in unprecedented fashion, effectively shut down and closed for business." But when you look at the housing market in Grey and Bruce county Ontario, this is really only half of a larger story.

In March, looking in terms of the actual numbers, the market was on fire. As stated in the March 2020 press release from the REALTORS®Association of Grey Bruce Owen Sound (RAGBOS):

"The average price of homes sold in March 2020 was a record $445,569, rising 26.3% from March 2019. The more comprehensive year-to-date average price was $422,913, rising 19.6% from the first three months of 2019."

This is a trend I have been following and have written about here before. A continued deficit of available properties and strong demand in our area have seen prices rise consistently for over 24 months at this point. That is a long-term trend, not a blip in the market.

Contrast that to the market stats for April year-over-year, which tell a different story.

"Residential sales activity in the geographical area covered by the REALTORS®Association of Grey Bruce Owen Sound totalled 119 units in April 2020. This was a large decline of 53.7% from April 2019 and was one of the lowest level of sales on record for the month."

Take that in for a minute, in a single month the number of sales declined by 53.7%, that is a huge blip but certainly not a trend.

As a realtor, it's hard to sell houses when you're locked up at home under quarantine, or self isolating, and nobody wants to come anywhere close to anyone else, especially not inside the home of a total stranger. This is doubly true when you watch the news each night and see the government urging you to stay home and avoid all personal contact.

However, the rest of the report it goes on to say:

"The average price of homes sold in April 2020 was $400,103, up 4% from April 2019. The more comprehensive year-to-date average price was $418,980, rising 14.7% from the first four months of 2019."

So even though sales dropped by over 50%, the average price actually went up by 4% over April 2019 and nearly 15% since January 2020. That's not a correction. It's a blip in a continuing trend. So even though it may feel like the market is in chaos, your home's value is staying stable and even increasing, despite the COVID-19 pandemic.

Many of those who contact me for information on the market believe there is some great correction in the housing market on the horizon. They are waiting on the sidelines for the prices to drop.

My opinion on this is follows an old truth in real estate: People will always need a place to live.

The longer you wait to get into the market, the more it will cost you.

On the other side of that coin, if you are looking to sell, there is no guarantee that we will continue to see 26% growth every year, as was the case in March 2020. But even in the worst market since the 80's, prices are staying stable.

Prior to working as a realtor I worked for a decade as a strategic sales and marketing executive across southern Ontario for large scale builder developers of new homes and condominiums. I can't tell you how many conversations I had with experienced people in the industry, all of us waiting for the condo market to crash. And we are still waiting. And prices keep climbing.

My crystal ball is broken and I am no psychic, but the current market continues to show growth even in the worst of times. People have to keep moving forward, the buyers are coming out and this summer could be a great time to make your move.

 

matt webb-smith

 

Matt Webb-Smith is a Licensed Realtor with Sutton-Sound Realty Inc., Brokerage.

For a free home appraisal you can contact him at matthewwebbsmith@gmail.com

 

 


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Updated March 12, 2020.

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