Real estate forecast bright but balanced
The Niagara real estate market is expected to stay strong heading into 2018.
The market has levelled out in recent months after prices increased on average 30 per cent from January to May 2017, says Brad Johnstone, broker of record for Royal LePage Niagara. He says the value of property in the Niagara region typically increases by two to five per cent per year.
“Last year was the best year in all of history ( for the Niagara market),” Johnstone says.
Real estate agents Ted Boldt and Randy Mulder don’t anticipate a drop in the new year because the high level of activity in 2017 resulted from the discovery of Niagara real estate — a market they say has long been undervalued.
Mulder, president of the Niagara Association of Realtors, says many of the buyers have been coming from the Greater Toronto and Hamilton areas. While Mulder says buyers are no longer “flooding the market,” he says activity should remain steady.
“People realized there’s quality real estate to be had here for a reasonable price, comparatively speaking,” he says. “I don’t think we’re going to see a heavy erosion of the pricing because a lot of that was a makeup.”
Boldt, of Re/ Max Garden City Realty, says the surge first became noticeable in fall 2016, after the market had remained relatively flat for the previous 10 years.
“We were undervalued … and all of a sudden, we started going up.”
He says prices have since remained steady, perhaps dropping slightly in areas that saw more volume this year.
“I kind of see that continuing into next year — more of a stable, balanced market — not really leaning towards a buyer or a seller,” Boldt says.
He says recent developments such as Meridian Centre and FirstOntario Performing Arts Centre are also attracting buyers. Niagara- on- the-Lake, Niagara’s proximity to the U. S., and the mild local climate also contributes to popularity, he says.
“There’s lots of good factors about why Niagara is a good place to be,” says Boldt. “( St. Catharines) is more exciting and new because we’re kind of reinventing ourselves.”
Jon Whyte, president of Ontario’s Home Builders’ Association, says GTHA buyers came out of necessity. He says Ontarians are moving farther away from work and family to find somewhere they can qualify for a mortgage.
“The housing boom in Niagara is a reflection of a bigger- picture issue,” he says. “People are coming … not only because of the quality of life we have to offer, but in most part, because of the relative affordability of housing we have here.”
The average property in the region has gone up in value from $ 338,261 in November 2016 to to $ 385,360, according to statistics released by Niagara Association of Realtors.
Whyte says price increases are happening everywhere in Ontario — particularly in the Greater Golden Horseshoe — and will continue to rise with housing regulations.
According to Boldt, Niagara properties are half to one- third of the price of housing in Toronto. He says Torontonians began selling their homes and buying similar properties in Niagara.
Boldt says foreign buyers, especially from China, contributed to rising prices and volume before the province introduced a speculation tax in April.
The new tax charges foreign buyers 15 per cent on properties bought in the Golden Horseshoe in an attempt to cool down the sizzling market.
Boldt says that cooling off effort is better for the market in the long run, as the market is more likely to crash if it rises too quickly.
“As much as people complain, I think these are actually good things. We’re trying to prevent what happened in the States,” he says, referring to the U. S. housing crash of 2008.
Statistics from the NAR shows the average sale price of property in November is up by almost 14 per cent from 2016, with a 17 per cent decrease in over- all property sales.
But, Mulder says it’s unfair to compare sales figures now to those experienced at the height of the boom.
“We’re comparing sales now to one of the hottest markets I’ve seen in my 55 years on this planet.”
He says developments in the region will help keep the market strong through 2018.
“Increasing the supply is one of the most vital parts of making a nice, balanced market here,” Mulder says. “As long as we keep providing buyers with supply of housing we should be fine, and there should be opportunities for buyers and sellers.”
According to statistics from Ontario Home Builders’ Association, housing starts increased by 6.8 per cent in 2016 and were forecast to increase in 2017.
Whyte says developments benefit not only the construction sector, but also the commercial and retail sectors, and fill the needs of the consumer.
“I mean, there’s immeasurable spin- off benefits to a thriving construction industry.”
But, he warns the rising costs of real estate, in addition to the new mortgage regulations, will make it difficult for first- time home buyers.
Under the new regulations, Canadians must pass a stress test and qualify at a rate two per cent higher than it currently is — meaning most buyers will have to have a 20 per cent down payment, according to an article from The Financial Post.
“If you’re not in the housing market now, good luck,” Whyte says. “Millennials aren’t buying homes because they can’t afford to.”
Mulder is unsure of how the new regulations will affect the market.
“We don’t really know how that is going to work its way through, in terms of the market itself,” Mulder says.
“The biggest thing to remember is, there is no real estate crystal ball,” he added. “It’s like predicting the weather — you look at some of the patterns that are out there, and you hopefully can get an idea of where it’s going to go.”