A look at real estate in 2021

By Lindsay Smith/Columnist

Is it a dream or a nightmare? You fall asleep and picture being at an amusement park, watching  your kids sitting in a car climbing one of the highest roller coaster hills you have ever seen. Once they get to the top, they drop like an elevator with its wires cut, only to disappear out of sight below the ground. Time passes slowly and finally the car returns above ground, climbing an even steeper hill, so high you lose sight of your children. You wake up and see it’s December 2020 and you just dreamt what has happened to real estate during this pandemic year. Crap, you woke up before you found out what happens in 2021. Let’s dig into what some of the “experts” are predicting and do our best to make sense of things.

Predictions.

TD economics: there will be a seven per cent decline in prices in the first half of 2021

CMHC: 2021 will see a nine to 18 per cent decrease in prices. (Canada Mortgage and Housing Corp)

Moodys Analytics: a decrease in prices by seven per cent

Swiss Bank UBC: Toronto is the third largest housing bubble in the world currently.

A quick search reveals that most of the “experts” are predicting a slowdown and for prices to fall. How will this affect Oshawa and the surrounding areas? I feel Durham Region is an area that will defy the predictions of the economists. If you look at the statistics, they tend to be Canada-wide and so broad they do not reflect the diverse communities in our country. What makes Oshawa so special and insulated from the dreary predictions? I believe there are many reasons our values will continue to rise. Here are some thoughts to ponder.

Oshawa has one of the lowest price points in the GTA and is located 55 minutes by GO-Train to downtown Toronto. Prior to the pandemic making its appearance, we were seeing a dramatic increase in immigration impacting our real estate market locally. The GTA has about half of the new Canadians settling into their communities which means we are growing by about 150,000 yearly. Couple that with low mortgage rates, reasonable prices, and a migration of people out of Toronto into the suburbs, it becomes clear why our market is booming.

We had a stalled year, meaning the market stalled mid-March and did not restart until June. The spring market (which tends to be the busiest time for sales) really began in the summer, and we saw record sales that continue today. (In November 2019 we had 252 detached homes for sale in Oshawa and saw 166 sales. Last month, November 2020, we had only 75 homes for sale with 232 sales.) Once we make our way to January we will be starting the year with one of the lowest levels of inventory we have seen in decades. If our inventory continues on its downward path we will start 2021 off similar to 2017 where we saw values spiking like we have never seen before.

One of the other factors, that for some reason does not get much attention, is the above average wages found in our area. Some of the area’s top employers are OPG, Lakeridge Health, Durham College and Ontario Tech University, and with the record number of homes being built, there are trades in almost every facet of new construction. A report from TD stated that in lower income groups the wages decreased by 13 per cent whereas for all other employees the decrease was less than one per cent. This statistic, as difficult as it indicates how hard hit the lowest income earners have been, also shows that the people who can afford homes are largely unaffected when it comes to a loss of wages.

We are starting the new year with a renewed sense of confidence as the vaccine starts to make it’s way into society. Independent of views of the vaccine being safe or not, we will see it spread hope into a year of uncertainty. This will be a stabilizer for the real estate market.

Real estate can be viewed as a complex industry, with pundits chiming in with theories and really pretty line and pie graphs. What differentiates real estate as an industry is the fact that it is mostly driven by families, young professionals, homeowners moving down to smaller units and investors. My experience is causing me to intuit that real estate is driven by supply and demand and currently we have a huge amount of demand, with very little supply. I cannot see that changing anytime soon. 2021, the roller coaster ride may turn out to be one we have never seen before. Thank goodness for seat belts.

Lindsay Smith

Keller Williams Brokerage Inc.