My report on the County real estate market this month centres on one simple point: County real estate prices have become disconnected from reality.
For the last several months I have warned that we were seeing a price bubble in the County…and now the market is actually heating up further.
The average existing house price in the County during February was $736,400, up 38% from the average price in February 2020.
Two recent examples from my own practice illustrate the irrational exuberance were seeing in today’s market.
This month I showed a modest, 3-season waterfront cottage which two years ago I valued at $375,000. It was listed last month and sold in days for $700,000 with no conditions.
In another example, a client bought a small 2-bedroom bungalow in Picton last September for just over $400,000. This week she received an unsolicited offer of $600,000, an increase of nearly 50% over six months.
Reality check: if the increases we’ve seen over the last year were to continue uninterrupted into the future, the median house price in the County would increase by more than 300% over the next five years. By comparison, the Ontario government expects economic output will grow 15-20% over the same time period.
This is clearly unsustainable. Will it end in a soft landing or a deep crater? No one knows, but the frenzy cannot go on forever.
helpful to hear the stats Treat but can you outline why this is happening aside from the pandemic and people fleeing city and able to work at home. How does pec compare to other tourist areas? How long can this housing bubble go on, any historical stats to compare and contrast. Thanks for all your good work. E
On the supply side, the pandemic has not made County residents want to get away. If anything, residents have been happy to be here. This is one important factor driving listings to record low levels.
On the demand side, you are right that people are fleeing the city during the pandemic and able to work from home. There are also other factors which are driving demand up. Despite growing concern about inflation, interest rates are being kept at the lowest rate possible to help the economy weather the pandemic.
Also, there are many affluent Canadians who travel extensively abroad…except last year as the pandemic shut down international travel. As a result, people had to vacation closer to home which brought the County and its charms to the attention of well-heeled travelers who had not been here before.