We may see some pre-pandemic normalcy in our housing market by the end of 2023 if broad immunity to COVID-19 is achieved this year, according to Canada Mortgage and Housing Corporation (CHMC).
You may remember the federal housing agency issued a rather bleak outlook in its May 2020 forecast. The housing market did not fall by as much as 18 per cent that year.
But CHMC certainly wasn’t alone in that assessment. The CIBC, Royal Bank, and Bank of Montreal all expected declines of around 10 per cent.
As we know now, the opposite happened, and is in fact, continuing to happen – especially around Southern Georgian Bay.
Fueled by historically low mortgage rates, obvious speculation, blind-bidding, and pent-up demand from buyers seeking greener pastures, real estate markets from Meaford to Midland have been outrageously wild since we were all cast into a global pandemic.
For example, a recent home listed around the benchmark price for single-family homes ($617,900), sold on the outskirts of Meaford for $130,000 over asking after receiving multiple offers.
That is something that just didn’t exist in the region pre-pandemic.
In its Spring 2021 Outlook, released Thursday, CMHC said housing market activity may return to normal by 2023, describing the pace of home price increases over the past year as “unsustainable.”
“We expect economic conditions to return to pre-pandemic paths by the end of 2023,” said Bod Dugan, CHMC Chief Economist.
CMHC expects more demand in new single-detached home construction – reflecting what’s happening in the resale market.
Collingwood is so sought after its town officials actually had to slow development down with a moratorium on building permits for the rest of 2021, citing water capacity issues.
CMHC says sales growth has been stronger for relatively more expensive single-detached units since households have sought larger homes from which to work, further supporting overall average price gains.
That could be true in Southern Georgian Bay, with the dollar value of all home sales this March more than doubling from a year ago, rocketing up 214.5 per cent.
It has also become quite clear that buyers are not perturbed by blind bidding in a ‘multiple offers’ scenario, as home sales jumped 106.1 per cent from March 2020.
For those who don’t know, blind bidding is when buyers make an offer but aren’t officially allowed to know the details of competing offers. It’s standard practice in most major markets and is also something provincial regulators have looked at changing.
What’s happened in Southern Georgian Bay over the past year is wild.
There have been twice as many homes sold, month-over-month, since then.
And the average sale price of homes sold in places like Wasaga Beach, Tiny Township, Collingwood, and the Blue Mountains went up 40 per cent.
The sales pace may slow down here if the shift toward work-from-home arrangements ends after the pandemic, but CMHC says the sustainability of that trend is “uncertain.”
For their part, realtors don’t really see it changing anytime soon.
“We’ve seen a lot of anecdotal evidence since the summer that households are considering significant lifestyle changes by relocating to less-dense cities and neighbourhoods,” says Christopher Alexander, Executive Vice President, and Regional Director, RE/MAX of Ontario-Atlantic Canada. “This has sparked unprecedented sales this year in suburban and rural parts of Canada and we expect this trend to continue in 2021.”