WINTER 2018 PART 1
Centre Wellington & Surrounding Area
The 2018 local real estate market will NOT be a repeat of the 2017 real estate market.
Let me state the obvious – the 2018 local real estate market will NOT be a repeat of the 2017 real estate market. Which is a good thing. In reality , we had 3 real estate “markets” in 2017 , which I refer to as THINGS ARE GETTING CRAZY ! ( Jan-May), What’s Going On ? ( June-Aug ) and A Return To “Normal” ( Sept – Dec ) . By the time things peaked in May , it was as if buyers thought there would never be another house available for sale ever again. Regardless of condition , pretty much any property sold in this heated market.
Sellers – IF they had a place to move to – did very well. It was not a fun time to be a buyer. But just as quickly as the market hit new heights … it ended … literally overnight. The wave of buyers from the GTA ended. The market in Toronto had also peaked … and much of the price escalation early in 2017 was a result of out of town buyers coming to town. Even those of us in the business were surprised how quickly things changed. Now , the market did not go dead by any means … in fact , we still saw demand for quality properties. It’s just that people were becoming more selective … and taking their time.
Looking back , we could not have hoped for a smoother transition. It could have been ugly. We could have witnessed panic and major price drops. But, it was just as though the whole market took a collective pause , logically assessed the situation , and returned to its senses. I’m not going to go into a detailed thesis as to why things didn’t go badly, but certainly a combination of normal market forces and government intervention played a role. ( Whether government intervention was really necessary is a question I will not tackle today.)
In the last four months of the year , buyers and sellers realized that while the days of massive double digit annualized price appreciation were behind us – the market had stabilized ( there would be no “fire sales” ) and sales activity was healthy in the fourth quarter – including some multiple offer situations on quality properties. Let me be clear – while the local market in general did not see any significant price depreciation in the last half of 2017 vs early 2017, there are certain properties purchased in the first half of 2017 ( in heated multiple offer situations ) that may still have valuations 10% or more below purchase price. I only hope that most of these buyers also sold a home into the same crazy market, so the “actual loss” is really an “on paper” one.
Which brings us to 2018. One thing I can tell you – your realtor will need to be a good negotiator and spend money on marketing your home to get the highest possible price in 2018. The “order taking” type of market we saw in 2017 is gone. But all indicators in the local data I have been pouring over suggests we will continue to have a steady market in 2018, with low single digit price appreciation.
Buyers will be much more selective in 2018 , willing to wait rather than overpay. It is too early to determine the extent of the effect of tighter mortgage financing rules which kicked in January 1st , but in my opinion , in general it will not be a major disruptor in our local market. Having said this, there is no doubt it will make it more difficult for younger buyers, the very segment of the market we should be trying to help get into the market. While we will see higher than historical pre-sales of new homes in 2018 , most of these homes will not be built out for over a year , thus the resale market will continue to feed the demand for buyers wanting to buy and move into the community in 2018.
Properties priced at under $ 500,000 will continue to be most in demand in 2018. Lack of listing inventory will keep upward pressure on pricing, especially in Elora. Arthur and Mount Forest will continue to experience increased activity in 2018 as buyers ( both first time buyers and retirees ) look for communities offering better affordability. Having said this , based on buyer activity and inquiries , I believe the higher end of the market will also perform well in 2018 , for both urban and rural properties within Centre Wellington. But again, buyers are becoming more selective and not in a rush to buy – looking for good value across all price spectrums.
And to answer the most asked local real estate question …. “Can you give me details and pricing on the upcoming Elora Mill condominiums? “ … the answer is … stay tuned .
I will offer a more detailed 2018 forecast at the end of January – until then , stay warm.
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