By Lindsay Smith/Columnist
September has finally arrived. Are you glad to see the summer almost over, or, are you happy to be one month closer to 2021? My business for 2020 has been nothing short of bizarre. We began the year in a super busy uprising market. The values were increasing dramatically from early January, and then mid-March, when the economy mostly shut down, the values started dropping. I will admit, I didn’t know what the short-term view of Real Estate would be, it looked pretty bleak. This period lasted until the end of April and a shift started to take place. We saw demand surge and the inventory (homes available for sale) was about half of what it was a year ago. When demand is high and inventory low, the natural result is increasing prices and Buyers bidding against each other. Let’s dig into what it looks like year over year:
Oshawa Prices: August 2020 August 2019
Detached: $672,500 $601,000 Increase – $71,500
Semi-Detached: $522,000 $461,000 Increase – $61,000
Attached Town: $582,500 $468,500 Increase – $114,000
Condo Town: $432,000 $333,500 Increase – $98,500
Condo Apt: $349,000 $262,500 Increase – $86,500
This is the third time in my career I have seen home prices spike as they are currently. The last two periods that have seen prices escalating were stopped when there was “uncertainty” introduced into the marketplace. When this occurs, investors (people who are buying homes to live in are still investors) tend to get nervous and shy away. It was the implementation of a foreign buyer tax in 2017 that seemed to be the tipping point for a crash, and in 1989 a headline akin to “Real estate market is going to fall like an elevator with it’s wire’s cut.” Seemed to be the tipping point. This, along with mortgage rates that hit 14% causing people to see uncertainty in the stability of home prices.
How is 2020 different? Other than having a pandemic gripping our lives, we are seeing confidence in the minds of Buyers for a multitude of reasons. Mortgage rates are at record level lows and do not appear to be increasing, about half of all new Canadians coming into the country every year settle in the GTA creating a large buying group. Also, rental accommodation is hard to find causing “downsizers” to purchase a home with no viable rental options.
All in all, the Real Estate market continues to move along with the values increasing month by month. The only “black swan” I can see, is when the federal government ends or limits the financial assistance this fall, as well as property owners who have done mortgage deferrals all coming due at the same time, may cause some homeowners to experience financial distress. The thing that will bring our Real Estate marketplace into balance is when Sellers decide to sell their home in large numbers.
August 2019, there were 344 detached homes for sale in Oshawa. As of last month, Aug/20 the number is sitting at 160.
My instinct and experience is that by spring of 2021, we will see values dramatically higher than they are today and as people commented in 1989, 2017, and as recently as last month that the prices “can’t get any higher” they will.
In a nutshell: home prices will continue to rise, rates are at rock bottom lows and our amazing city, Oshawa will continue to be a sound choice for real estate investment.
If you have any questions, or if you see a Real Estate emergency on the horizon, I can be reached at firstname.lastname@example.org
Keller Williams Energy Brokerage