November 2018 - Southern Georgian Bay Real Estate Synopsis

  Sales results for the southern Georgian Bay real estate market are now out for the month of November and show a slight increase in dollar volume for the month versus at the end of November 2017 but with that is a continuation of weaker unit sales that we have seen throughout most of 2018.

  Sales reported through the MLS® system of  the Southern Georgian Bay Association of REALTORS® for November reflect a modest 2% gain in dollar sales revenue for the month totalling $75.3 million versus $73.9 million in November 2017.  At the same time, MLS® unit sales in November of 134 properties shows a 12% decline from the same month last year when 153 sales were reported.  Ironically the number of new listings coming to market in November increased 8% with 183 properties coming onto the market compared to 170 new listings in the same month last year.  Nonetheless this increase in available inventory coming onto the market as we approach the holiday season is no doubt "to little to late" to bolster overall the sales shortfall for 2018.

  After two years of back-to-back annual MLS® sales in 2016 and 2017 that surpassed $1 billion for the first time in each of those years, sales volume for 2018 is going to come in below the level we saw in 2017.  Year-to-date MLS® dollar sales to the end of November totals $880.2 million, a decrease of 14% from $1.025 billion in MLS® listings sold during the first 11 months of 2017.  These year-to-date results for 2018 are also below the results we had in 2016 both in terms of dollars and the number of properties sold.  With the holiday season being a priority for many, December is traditionally a slow month for real estate sales and listing activity.  Monthly sales in December are typically below $50 million, this would suggest total annual MLS® sales across our market for 2018 will be in the $925 +/- million range.

 MLS® Single family home and condo unit sales are both running at a similar pace and are well below the number of properties sold through the first 11 months of 2017.  Year-to-date single family home sales total 1,352 units down 18% from 1,656 sold in the same period last year.  At the same time condo sales of 414 units are also down 18% from last year when 503 units we sold.  In both cases it is important to point out that new home and condo sales made by developers are not included in these MLS® statistics some of which would account for the softer sales of MLS® resale properties this year.  Vacant residential land sales are well below the number sold in 2017 primarily due to a lack of available lots listed for sale.

  Sales in most price segments of our market are lower than 2017.  Two exceptions to this is the $800,000 to $1 million range where year-to-date sales of 91 properties are up by 4 sales from one year ago.  In addition, sales over $2 million are also up modestly with 14 sales reported in 2018 compared to 11 in 2017.  As per the accompanying chart every other segment of the market is running at a pace below last year.  In conjunction with this, every municipality in our region has seen a decline in the number of MLS® single family home sales this year with decreased unit sales running 13% to 22% below the number of homes sold through MLS® in 2017.

  In many segments of the market, reduced levels of inventory have also created a slowdown in sales activity during 2018.  Since September there has been an uptick in new MLS® listing activity but on a year-to-date basis new MLS® listings which total 3,031 properties are still 5% below the number of new listings that came to market in 2017.  Again when you take an in-depth look at the year-to-date MLS® statistics there are always exceptions to the overall results.  In terms of inventory, our market currently has an abundance of properties listed for sale priced $750,000 and above.  As of this article we have just over 14 months of available inventory for sale priced above $750,000 so there are plenty of options for buyers in this price range and some good value to be had.

  Overall, 2018 has brought about a much more balanced market.  The frenzied bidding wars we experienced in 2016 and early 2017 have sharply diminished leading to much more favourable and less stressful market conditions for sellers and buyers alike and we are not alone.  Real estate activity in the Greater Toronto Area has also slowed as it also has in large urban centres such as Oakville, Guelph, Cambridge, Kitchener/Waterloo, London and elsewhere.  These are all strong feeder markets for southern Georgian Bay real estate.  A cooling off of market conditions in our region and elsewhere was bound to happen some of which is driven by increased mortgage interest rates and tighter lending rules.

  The demand for southern Georgian Bay real estate has not diminished.  Whether it is for retirement or recreational use, people still favour the varied four season lifestyle afforded  by property ownership in this area and this is not a trend that is likely to disappear anytime soon. 

  As we head into 2019, sales activity will ramp back up as it always does heading into the spring.  How much the market rebounds in 2019 over what we have experienced in 2018 is any one's guess.  There has never been a better time to consult a local REALTOR®,  one with extensive knowledge of this area and current market conditions to assist you with your real estate buying and or selling goals and objectives.  Contact me and I would be delighted to provide any of my followers with a no obligation consultation of your particular buying and or selling needs. 

October 2018 Market Report, Final Comments

  As stated in my post dated November 11th and titled "Area Real Estate Sales Continue to Remain Soft in 2018" I pushed the notion that paying attention to statistical data is a key element in helping our valued real estate clients make informed decisions.  As November draws to a close and the monthly results are known, I suspect we will have some better insight into what the next couple of years will bring, in the meantime let's take one final look at what has happened in the first 10 months of 2018.

  Year-to-date MLS unit sales are running 19% behind 2017 and this decrease is equally shared in both the single family home and condominium segments of the market.  Through the end of October we have seen 1,256 single family home sales, a decrease of 18.6% from last year.  Condominium sales year-to-date for the first 10 months of 2018 total 375 units and similarly to home there too are down 18.8%. 

  Meanwhile, vacant land sales are down over 65% this year with 100 units sold compared to 293 sales in the first 10 months of 2017.  While the overall inventory of properties available to purchase remains below last year, nowhere is this more evident than with vacant lots.  The glut of lots for sale from a couple of years ago are gone and no newly created lots/subdivisions have come on stream to replenish those lots that have sold and now have homes under construction.

  The obvious question after reviewing the softer MLS sales data for many real estate market across Canada is, what is the cause and how will this downturn in real estate sales impact us moving forward in 2019, 2020 and beyond? 

  First, we all need to acknowledge that Canada's real estate market is somewhat unique to other parts of the globe.  Given the market strength that Canadian real estate has demonstrated for many years, we are viewed by many countries as having a fascination with real estate and or home ownership regardless of the cost or overall economic climate.  In most markets across the country, real estate values have tripled between 2000 to 2017 far out pacing the increase in annual incomes during the same period. Yes our market did slow down after the collapse of the U.S. real estate market through 2007 to 2009 but not nearly to the extent of our neighbours to the south.  Real estate activity in Ontario started to rebound strongly in early 2010 the year in which the province implemented the harmonized sales tax (HST).  Many in the province had the impression that home purchases under the new HST tax structure were going to be HST taxable and they rushed to buy.  In some circumstances HST can apply to the purchase of a new home and in even a resale but that is more of an exception than the rule.

  There is no question that low interest mortgages in recent years have helped to fuel the housing craze we have experienced.  Multiple offers, with properties often selling for over their highly inflated list prices became the norm.  Low interest mortgage have allowed buyers to spend more on a home they perhaps intended.  Sooner or later that craze had to end, interest rates would rise as they have and other economic drivers would come into play all of which would impact the real estate market and other segments of the economy.  This week's announcement by General Motors Canada is a good example.  Some couples with both the husband and wife working may now be faced with raising a family and paying down debt as a one versus two income family and it's not just the auto industry that will create this, the oil and gas industry currently faces its own set of problems. While situations such as this is not a pleasant scenarios it is reality and it will no doubt have an impact on real estate and other aspects of our economy in the months or years ahead. 

  Only time will tell, November's market statistics will be out shortly.  Stay tuned and follow my blog for ongoing market reports and other information that I will post to help you make information decisions about you specific real estate needs and or goals.  For details on the luxury home and condominium market in our area see my Carriage Trade Homes blog.






   

General Motors Closures - Where Do We Go From Here?

  Yesterday's announcement by General Motors that is was closing several manufacturing plants in both Canada and the U.S. was grim news for 2,500 assembly workers in Canada, 14,000 in the U.S. plus thousands more with salaried positions throughout the company.  I learned of this pending announcement Sunday night on my way to Toronto via an exclusive story released by CTV news.  While it is unfortunate not only for the affected workers but for the province as a whole, it was not unexpected.  The Canadian retail industry has gone through change ie: Sears and Target and will continue to do so, the auto industry and other businesses is no different.

  On Monday I was one of approximately 400 members of the Ontario Real Estate Association (OREA) attending a conference in Toronto to discuss advocacy issues pertaining to both REALTORS as well as Ontario home/property owners.  Speakers at this event included Premier Doug Ford, NDP Leader Andrea Horwath, Green Party Leader Mike Schriener, interim Provincial Liberal Leader John Fraser, Canada's Ambassador to the U.S. David MacNaughton and lastly former Prime Minister Stephen Harper.  Rarely do you have the opportunity to meet and hear such political talent in the same day and I felt privileged to attend.

  Needless-to-say Monday morning's announcement by GM news impacted the conference, Premier Ford was delayed half an hour in arriving having been on the phone addressing the issue with GM's President.  Whether you like Premier Ford or not, Ontario's new government have moved quickly to address many of the issues facing the Province not the least of which is the economy and the deficit.  Mr. Ford did not shy away from the closure issue acknowledging that GM workers will need assistance in securing new employment.  At the same time he remained resolute that Ontario is "open for business."  Faced with global economic change and competition, he said that Ontario and in fact Canada needs to attract business that includes smart and other up and coming technologies, artificial intelligence and those that represent the future growth of business outside the traditional manufacturing sector.  Ms. Horwath on the other hand touted that the government needs to fight GM's decision in every way possible, as does the head of their Union.  Clearly they have no grasp of reality and they still cling to the belief that unions have a lot of clout.

  My father, a dentist like his farther and brother was a car guy so I come by it honestly.  He was for the most part a strong GM customer.  Growing up we had Chevrolets, Pontiacs, an Olsmobile even a Corvair with the odd Ford thrown into the mix.  My father died in 2001 and I have always thought how shocked he would be if he had lived to see GM file for bankruptcy with the Pontiac and Oldmobile divisions both gone along with Mercury, Plymouth and others.  I as well have had my share of GM vehicles over the years.  In addition to my current car an Audi, my wife has a 1980 Corvette which she drives in the summer and it continues to go up in value.  We also have a 2015 GMC Denauli pick-up bought earlier this year (with cash) for less than half of its original $69,000 sticker price.  Will I ever buy a brand new vehicle again?  Not likely when I can let someone else take a 30% or 40% hit in value in the first three or so years of the vehicle's life.  Also, I am not interested in low interest financing, "employee" pricing or any other gimmicks the auto makers throw at consumers. 

  I moved to Collingwood in 1985 as the result of a transfer with Goodyear Canada.  Goodyear's Collingwood plant was a significant supplier to GM and Ford that included fuel and transmission lines, rad hoses and other hose products.  Those days are long gone.  Collingwood's Pilkington glass plant supplies auto glass for the Chevrolet Impala, a poor selling car that will soon no longer be in GM's vehicle lineup.  My father had a 1962 Impala, he always said it was the nicest car he ever had, I wish I had it now!  Fortunately the majority of Pilkington's business is outside of GM, good for them.

  Following their brush with bankruptcy GM is in relatively strong financial shape.  By means of the direction they announced yesterday, they have chosen to invest in the future which like for may other car/truck manufacturers includes electric vehicles and those that are self driving as reflected by GM's purchase of San Francisco based startup Cruise Automation for $1 billion in 2016.

  Times and marketplace changes driven by consumers will continue to rise and I believe the acceleration of those changes will continue to escalate.  Politicians and unions can kick and scream all they want but trying to fight what consumers want and are willing to pay for is like trying to swim up Niagara Falls.  GM has set a good example for many in business to follow, make the required changes to float with the rising tide rather than try to swing against the current.

  Like everyone I offer my condolences to the GM workers affected by the closure of Oshawa and GM's other facilities.  You will absolutely need to maintain a strong resolve to find alternate work, which may require training for new skills in order to transition into a completely different field of work.  Despite the challenges we all face from time to time perseverance always pays off.  Hopefully Ontario's current government will implement the required efforts to develop employment opportunities in the province's economy that will offer opportunities for these displaced workers as well as for our our children, opportunities that we as adults never had.