Niagara home buyer ‘feeding frenzy’ slowing

After more than a year of soaring real estate values in Niagara, “the feeding frenzy is slowing down,” said St. Catharines realtor Randy Mulder.

Although the region’s real estate market has yet to be hit as hard as the GTA, he said the impact of measures introduced by the provincial government to rein-in escalating house prices will eventually trickle down to Niagara.

Real estate sales in Toronto dropped by 25.3 per cent from April to May, in the first full month since the provincial government launched more than a dozen measures — including a 15 per cent tax on foreign buyers of homes purchased in the Golden Horseshoe.

On a national scale, the number of residential properties sold fell by 6.2 per cent in May compared to April, in the largest monthto-month decline in nearly five years, the Canadian Real Estate Association reported.

But during that same time period, property sales actually increased by 12.1 per cent, locally. Niagara Association of Realtors monthly market report, released last week, says 955 Niagara properties were sold in May, compared with 852 a month earlier.

Nevertheless, Mulder, the president of the Niagara Association of Realtors, expects that the impact of the provincial government measures will eventually hit home.

He said it has given Toronto home buyers a reason to “pause for a moment and see what effect it would have.”

“And if that happens in Toronto, it will have a ripple effect like the stone in a middle of a pond.”

Despite the month-to-month sales increase, Mulder said he has seen some recent indications that Niagara’s real estate market could be slowing down, too. But here, it’s primarily being driven by an increase in homes being listed for sale.

For instance, he said there were 1,280 new listings added to Niagara’s inventory of homes for sale, compared to 1,072 a year earlier.

“There’s a little more inventory which was very much needed in order to have any selection whatsoever as a buyer,” Mulder said.

He estimated that there are currently only enough homes on the market to last less than two months, and that is “strongly defined as a seller’s market.”

Brock University business accounting professor Feyez Elayan said home values in Niagara are catching up after decades of being undervalued, which may help protect them from fluctuations in the market.

“People are starting to figure out the value of the Niagara Region,” he said, referring to amenities and events that make the region a desirable place to live. “We are sitting on a goldmine.” Although average sale prices have dropped slightly in several Niagara communities over the past few months, the overall average continues to increase.

Average sale prices across the region are currently about $429,455 – about $100,000 higher than they were in May 2016.

And Elayan, who pays close attention to real estate trends, expects that to continue.

He said similar measures to those launched in Ontario in April have been previously implemented in other provinces and countries. And while the measures can result in an initial decline in sales, it should not lead to any significant decreases in housing prices.

“The prices will come down and settle, let me put it that way. But it’s not going to go back to the previous level,” he said.