The SCHOLTE PROspective - Volume 2, February 2021

Posted by Super Admin on Monday, February 22nd, 2021 at 1:40pm.

Welcome to the SCHOLTE PROspective

Mike Scholte holds an Honours Commerce degree in Economics and Finance. Throughout his career, he has worked as a Real Estate Broker and Manager, Commercial Lender, Financial Planner, Residential Mortgage Lender, and Business Coach. Mike has helped people and businesses grow since 1995. Mike represented the real estate industry as President of the Southern Georgian Bay Association of REALTORS® in 2020.

Winter has finally arrived in the Southern Georgian Bay region of Ontario, and to many, it's a time to enjoy the pleasures of winter activity. This year has been shrouded in the Covid 19 pandemic and our region like all of Ontario has been in lockdown. This has significantly reduced the number of out-of-area visitors and many of the traditional attractions have been suspended. That being said, the lockdown has given many individuals the time and opportunity to re-evaluate work, commute, accommodation, and lifestyle preferences. Some of these opportunities have come by choice and others have not; we are all facing a new permanent reality… our world is forever changed. The Scholte PROspective’s intention is to be your guide when reading housing statistics so you are able to navigate news and opinions and ultimately filter what is important in your decision-making process. For your reference, the statistics and geographic breakdown discussed herein are defined in The Scholte Prospective VOL 1.

 


Key Metrics of Real Estate Economics

Months of Inventory (Absorption Rate)

Months of Inventory (MOI) is a helpful statistic to answer the question... “How's the market?”  Simply, it is a measure of how fast all the existing homes on the market would last given the current pace of sales assuming no new listings were added. Both the Eastern and Western regions remained constant at 0.8 months and 1.3 months respectively indicating a strong seller's market.















 


Sales to New Listing Ratio

Keeping in mind that a balanced market would show a Sales to New Listing ratio at a 50% level.  Both regions carried a high Sales to New Listing Ratio in January.  The 92.3% S/NL Ratio in the Eastern Region was a sharp drop from December and the Western District S/NL at 92.8% also showed a steep month-to-month drop.  Both these statistics support a strong Seller's market however a reduction of sales and listing activity is not uncommon in our trading area during January. Even with the Lockdown of all regions in Ontario, there was a strong demand for new inventory to offset the sales activity. It is now common to see properly priced homes experience multiple offers and benefit from sales results well above the asking price.

If you are currently considering listing your property for sale or are looking to rebalance your housing portfolio,  this is an opportune time to put your property on the market.  You can see from the above charts that typically a seasonal surge of new listing occurs in April, May, and June and this will add new competition for inventory and increase consumer choice for prospective purchasers.


 

 


Average and Median Prices

As mentioned earlier, our region has been experiencing a surge of demand that has not been offset by an increase in supply.  The direct result of this has been positive pressure on both average and median prices both in the Eastern and Western regions. In our last PROspective, we predicted an increase of average price between 4 - 5% by the end of Q1. In the Eastern Region, the average price increased by 5.99%. In the Western Region, the average price increased by 1.41%. One might speculate as to why the difference between regions.

 

The average pricing used in the west is a composite of a broader home type, ie. Condo, freehold, rural, and recreational which affect the values significantly. Another observation is the higher existing pricepoint in the west.  Investors and purchasers are seeking communities with commutable proximity to amenities while experiencing better price options and less competition. Communities such as Stayner, Wasaga Beach, Elmvale, Meaford and Tiny Township are examples of communities benefiting from this flexibility and broader consumer choice.

 


From Quantitative to Qualitative Analysis

Unless you are living on another planet it is impossible to avoid the news headlines about Real estate.  “Home Prices are Surging,” Prepare to Pay More,” Housing Boom has No End in Sight,” or “Will the Real Estate Bubble Burst.”  The irony is these headlines have been in the news without much change for decades.  News is important, however, an educated and fact-based analysis of the news is critical or you will miss opportunity out of fear or misinformation. From a qualitative perspective, there has been and continues to be, a massive exodus from the City of Toronto to our region which we now classify as an “exurb” (see SCHOLTE PROspective VOL1).


It is a reality that our market lies within 2 hours of the largest metropolitan city and population in Canada. Compounded with a new acceptance of remote work life, desire for larger and socially distanced living space, and generational cohabitation,  our region is a prime settlement area. There is no doubt that prices have steadily increased over the last year, however, the market conditions are favourable for continued demand for real estate, and continued growth in prices. Much of our market is poised for another price surge as more purchasers are considering peripheral alternatives outside Collingwood, Town of the Blue Mountains, and Midland. Another interesting trend is the uncertainty of travel for the foreseeable future.  With this new reality, consumers are looking for recreational and cottage property to enjoy as a travel alternative. The Eastern Region of our market is experiencing increased benefit from this demand and we are expecting that region to be very active as we move into the spring market.  

Success in this current real estate market requires consultation, preparation, and local market intelligence.  Strong relationships are required with your Realtor, Mortgage Broker and Lawyer so you can be responsive and proactive to market opportunity.  This is a market that will challenge you to expand your comfort zone and accept the new reality of “above ask” sales resulting from intense but manageable competition. Navigating this market without skilled guides will be difficult and the wait-and-see approach could prove costly in the future. The Jen Scholte Team is committed to your home buying and selling success.  Each of our Team Members is well versed in all our market opportunities and each member brings specialized knowledge of different communities. We use the latest technology, skill, and systems to ensure your success.  

 

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