I am going to start this post off with a somewhat different flavour. I admit to being a bit of a statistics junkie especially when it comes to real estate and other matters involving the need to make qualified, informed decisions. There is an old saying that "figures lie and liars figure" which makes having accurate information and data all that more important. For me this is especially true when serving my real estate clients and helping them make qualified and important selling or buying decisions. Sharing relevant information and data is therefore in my opinion a key priority in my role as a "consultant" so-to-speak to real estate buyers and sellers.
There is no denying that most real estate markets across Canada have experienced a much softer year in 2018 than in 2016/2017 and the southern Georgian Bay area is no exception. Following record breaking sales in 2016 and 2017 where MLS® sales reported by the Southern Georgian Bay Association of REALTORS (SGBAR) exceeded $1 billion, we are going to fall well short of that historic sales volume for 2018. I am happy to report however that sales through our Brokerage, Royal LePAGE Locations North have remained strong this year especially over the past couple of months. Kudos to our sales staff and the administrative assistants in our five area offices for their efforts in serving the needs of our valued clients.
Through the end of October, year-to-date MLS® sales in our area total $803.9 million, 15% below the $950.9 million worth of properties sold in the first 10 months of last year. MLS® year-to-date unit sales in our market through October are down 376 properties or 19% from one year ago. The biggest question we need to ask ourselves for this slowdown in area real estate activity is why, what if anything has changed?
First, the southern Georgina Bay area has become and remains a prime area that attracts buyers. Arguably whether it is a place for part-time weekend enjoyment, a location for your family's primary residence or for retirement purposes, we have a lifestyle that is second to none. People have been increasingly coming to this area for years and that trend is not likely to change any time soon unless economic or other circumstances come into play that will affect that.
One of those circumstances is affordability. Everyone is aware that interest rates have crept up in recent months. This combined with the fact that lending rules have been tightened with respect to attaining a mortgage has had some downward pressure on many buyers ability or willingness to make the plunge into home ownership. In my management role I have signing authority for the Brokerage and in recent months I have signed several Mutual Release documents cancelling sales where Buyers we unable to get the required financing to complete their purchase. This does necessarily mean the Buyer's credit rating was at fault. In some cases the lenders may as the result of inflated prices, not seen the value in the home or condo the Buyers was willing to pay or the property did not get the appropriate "realistic" appraised value to secure financing. This trend is not likely to change any time soon.
Canadian real estate prices have on average tripled from 2000 to 2017 which explains to a large degree the rampant growth in both prices and real estate activity overall. Much of this has been the result of low interest rates/credit which is a polite way of saying "debt." An article in the Financial Post back in September titled "Canadians household debt is creeping back again" speaks to this issue and personally I believe this poses a potential threat to the strength of both our real estate market over the next 2 to four years and perhaps the economy as a whole. Am I being a pessimist? Some may think so but it's more a matter of being realistic and again looking at the data. More on this in upcoming posts.