By Mike Baker
It’s hard to believe what’s happened to the housing market over the past 12 months.
Call me naïve, but when the COVID-19 pandemic first hit a little more than a year ago and it became clear just how big an impact it was going to have on all of our lives, I felt a long-needed correction was on the horizon. And I wasn’t alone.
I can remember talking to real estate agents shortly after the implementation of the first provincial lockdown. Many of them were worried about how they were going to make a living the further we got into the pandemic. The Canadian Mortgage and Housing Corporation, in its 2020 housing market outlook, released in June, predicted the nation’s housing market would crash by 18 per cent by the year’s end.
Instead, we saw the single greatest annual increase nationwide that we have ever seen.
According to the Canadian Real Estate Association, from February 2020 to February 2021, the national market has increased 25 per cent, from an average price of $542,484 to $678,091. Ontario is the second most expensive provincial market, just trailing British Columbia, with prices spiking, on average, from $693,886 in February 2020 to $864,159 in February 2021.
The jump has been even more pronounced in Haliburton County and the rest of the Lakelands region. Over the past 12 months, the local housing market has seen prices increase by 37.4 per cent – from $364,900 in 2020 to $501,500 in 2021.
So how did we get here? I can think of a couple of reasons.
First, the Bank of Canada dropped its interest-setting rate to 0.25 per cent last March in an attempt to ease the impact of the pandemic on the economy. The bank has maintained the rate, the lowest we’ve ever seen, for the past 12 months and has indicated it will stay at that level until at least 2023.
These lower interest rates have opened the door to buyers who previously didn’t qualify for a mortgage under the federal government’s new stress test system.
Then there are the sharks out of Toronto. Since the onset of the pandemic, more people than ever before are working from home. That has seen many individuals flee the city in search of a slice of rural paradise, where they can enjoy their surroundings while still getting the job done. With higher salaries, and, potentially, money in the bank from the sale of property in the city, many of these people can afford to bid way over asking price on properties they want – driving prices up for everyone else.
My wife and I recently purchased our first home and the process was unlike anything I’ve ever been through. We registered offers on multiple properties, often times going way over the asking price, and still comfortably lost the bidding war. In the end, we had to jump on an opportunity our realtor presented to us for an in-house listing, allowing us to buy the place with no competition. Of course, to do that, we had to go substantially over the asking price. But hey, at least we were able to buy.
I fear that many from my generation, and the generations to come, won’t have that same opportunity, no matter how well they plan or how much they save as young adults.
We’re now facing up to the very real possibility that, perhaps for the first time ever, young adults with jobs in Haliburton County won’t be able to afford a place of their own in their hometown.
And, according to industry professionals, this red-hot market is showing no sign of cooling down. It really is a ridiculous market.