Hot, hot, hot

It’s a good news/bad news story.

If you are a realtor or home seller, the housing gods are smiling on you. Sales (and commissions) are brisk, and prices are climbing upwards.

But it’s bad news if you are searching for a home in Niagara, because properties are becoming so expensive that it may limit a young family’s ability to handle the debt load, even if bank interest rates continue at a low ebb.

“It's evident the Niagara Region remains at the top of the list for home buyers,” said Terri McCallum, President of The Niagara Association of Realtors, in a November 3 press release. “Looking at 2020 vs 2019, the number of new listings is down only 1.2%, while sales are up 39.5%, moving the homes price index up 18% and the average days on market down 36.2 %.”

Residential home sales in Niagara totaled 883 units this October, compared to 663 in October 2019. In Pelham, both listings and sales were up from September, and the average price of a home sold was $651,000, up some $75,000 from a year ago. The benchmark price of homes in Pelham is second only to Niagara-on-the-Lake within the region. The average sale price across all of Niagara was $498,900 in October, an 18% increase from the same point in 2019.

Paul Allaster, a sales rep for Re/Max Garden City Realty in Fonthill, said that the current market has low inventory and more buyers than available houses, with many purchasers migrating from outside of the area. He expects the price differential between Niagara and Toronto will keep the local market strong, spurred by low interest rates, the promise of GoTrain expansion, and people working remotely from home during the pandemic with no need to commute.

“Over the next two to three months we know there will be a slowdown in the volume of sales…that’s just a seasonal reality,” said Allaster. “Price gains are generally restricted to the first six months of the year, so prices should remain relatively stable until the end of [this] year. But with economists forecasting record low interest rates for the foreseeable future, we expect the market will catch fire again early in 2021.”

Darcy Richardson, a broker with Revel Realty in Fonthill, said that when the pandemic hit, there was initially a massive decline in the number of sales and new listings. People were nervous, not knowing what the economic landscape was going to look like in the months ahead. But a shortage of inventory contributed to sale prices holding firm, and average days on the market remained low.

“In July, we began to see the number of sales spike from the prior year. However, the number of new listings remained slightly less than in 2019. This is where we began to see the average sale price creep up slightly more than the past months,” said Richardson.

The current lack of supply in relation to the demand of inventory in the Region has created a seller’s market, which lends itself well to those selling their home, she said.

“While there is a strong demand for homes in Niagara, coupled with interest rates being historically low, I find that buyers are still very cautious when it comes to purchasing a home and continue to be mindful of the fair market value of a house when offering to purchase a property. With the ever-changing effects of COVID-19, it is hard to predict with exact certainty where the Niagara real estate market is headed, but currently there are no indications of a slowdown.”

One of the local market’s most experience agents, Debbie Pine, with Royal LePage in Fonthill, agreed that the market is in uncharted territory with the pandemic, but that if a listed house is priced correctly, it should sell quickly.

“Now more than ever, people really need to have an experienced realtor helping them navigate the market because, by yourself, you're not going to get what you want,” said Pine.

The half-million-dollar price point is very hot in Niagara, attracting multiple quick offers

The buyers Pine feels most sorry for are prospective first-timers, who are having a hard time affording a foothold in the market.

“The half-million-dollar price point is very hot in Niagara, attracting multiple quick offers,” said Pine.

“In Pelham specifically, the $500,000 to $800,000 segment is moving, as long as the houses are remodeled, renovated. And even in the $1 million- plus segment, if the house has been done up and staged right, people are willing to pay the price.”

No open houses are currently occurring in Niagara due to COVID, and the local real estate board is asking all agents to make sure that there are no overlapping showings, to encourage social distancing. Face masks and disinfectant are available at all showings.

Niagara’s housing prices have doubled in the past decade, but are still considered to be affordable for the average family, costing about half the price of a comparable home in Toronto. But some in the real estate business believe we have reached a “tipping point.”

Canada Mortgage and Housing Corporation market analyst Inna Breidburg, speaking at the Greater Niagara Chamber of Commerce’s Niagara Economic Summit series last week, told the St. Catharines Standard, “If prices continue to escalate and wages grow at a slower pace, conditions won’t be affordable in the Niagara region, and it’s going to happen quite soon.”

Surprised by the speed of the housing market recovery during the pandemic, Breidburg said that part of the reason is “pent-up demand” on the part of those who have been delaying a house purchase, but have decided that now is the time to lock in at “all-time low mortgage rates.” The pandemic has played a role, given that people are spending more time at home socially-distanced, which has caused them to reflect on the inadequacies of their existing living space.

Niagara Region Director of Community and Long-Range Planning Doug Giles, another speaker at the Niagara Economic Summit, said the Region’s population continues to increase at about 1.6 percent annually, with expectations of reaching 674,000 by 2051.