Prices in Barrie and Simcoe County are up a whopping 23.5% since this time last year. Multiple offers are commonplace, the number of days it takes to sell a home is at a record low and homes are selling at an average of 104% of asking prices. There are multiple factors influencing this dramatic rise in price. I would like to briefly address each of these factors to shine a light on what it is that is driving the market higher.
- Low Interest Rates. The lower interest rates go, the easier it is for buyers to borrow for a mortgage and interest rates are lower than have ever been recorded. With interest rates so low, buyers who wouldn’t have otherwise been approved for a mortgage are now able to buy. And buyers who were already able to buy are now able to buy more expensive homes. When the amount of money a buyer can pay for a home goes up, the price of homes generally goes up as well. Rates are expected to stay low for some time so this will continue to apply upward pressure on the real estate market.
- Low Inventory. Inventory is almost half of what it was before Covid-19 began. Homeowners are much less interested in selling their homes during this uncertain time. With fewer homes on the market to choose from, there is more competition for what is available, driving prices even higher.
- The GTA Migration. The GTA has had the highest number of cases of Covid-19 and therefore the toughest lockdown measures in Ontario. With many workers having been given the opportunity to work remotely, the opportunity has arisen to relocate. Many city residents are living in a home or condo much smaller than what they would like, especially if one or more people are now working from home. Barrie and Simcoe County have larger homes, on larger lots, and at more affordable prices. Simcoe County is also close enough that if workers were required to return to their offices in the city, the commute would be reasonable. Prices in the GTA have been steadily rising for decades, the implication of which is that homeowners have significant equity in their homes. This gives buyers coming to Simcoe County from the GTA a tremendous amount of purchasing power, making them more competitive and driving prices higher further.
- Move-up Buyers. For homeowners that have been saving to move into a bigger home, the rising home prices have now given them the opportunity to use their increased home equity to move up. Move-up buyers are beginning to represent a larger pool of buyers and are adding even more demand to the Simcoe County real estate market.
- Delays in Construction. Although many new starts are planned, new-home builds in Barrie have slowed for a number of reasons. Municipal approvals and subdivision plans/permits have experienced delays, due to the COVID-19 shut-downs and low staffing levels. Furthermore, building supplies are scarce and more expensive. Finally, builders were challenged in finding tradespeople due to CERB availability or lack of childcare. An ongoing and widespread housing supply shortage is likely to continue, presenting challenges for homebuyers and putting continued upward pressure on home prices.
Ok, there you have it. Nobody knows exactly what the future will hold but hopefully, you’ve found this information to be helpful in some way. Thank you for taking the time to read this article. Feel free to get in touch with me if you are looking for a real estate agent, I would love to work with you!