All cheer….YEEAAAHHH, the recession is over, the wicked witch of the manufacturing layoffs is dead and we can all go on spending again….Or can we? In this post we examine some of the recent trends in the Barrie real estate market and try to identify what’s really happening, or more importantly what’s around the corner.

A quick revisit into recent history; In August 2008 the Barrie real estate market peaked after a reasonably healthy start to the year. The average price of homes in the area was approx $259,000. The storm clouds were hovering south of the border as USA sub prime lending spiralled out of control and eventually imploded, taking with it several large US investment banks. The world held its breath and in Barrie,
the market took notice. Between Aug 2008 and March 2009 prices fell approx 5% across the board before buying was spurred with a combination of super low historical interest rates and a surge in Investor interest at the budget end of the market. Since that time prices have steadied and the Barrie real estate market has seen a return to a more ‘normalized’ market. As of last month, March 2010, exactly 12 months after the low, we had rebounded to a price level slightly higher than the Aug 2008 high. This is all good, price stability with the average days on market reducing to an average around 40 days from a year ago 50+ days.

Anyone seen the news lately? It seems we are back on track, our finance minister has declared the recession over although caution remains and the number of people out of work appears to have stabilized. I might be out on a limb here but unemployment stabilizing at around 10% of the workforce out of work doesn’t exactly fill me with joyous applause, I suppose we should be grateful that it has at least stopped going up!  One of the metrics I use when I am looking at the Barrie real estate market is the number of homes that are being foreclosed on. In Ontario we use the term ‘Power of Sale’ not foreclosure. The actual process is different between the two, but for purposes here think that Power of Sale has the same outcome for the home owner, I.E. they lose their home. I should point out that this is just one of many metrics that I look at, but it is a troubling one.

Let’s take a quick flick back over the past few years:

In years prior to 2007 on average you would find 20-25 properties listed on the Barrie Real Estate board that were under a Power of Sale with maybe half that number selling on a monthly basis. For a populous area the size of Simcoe county with over 200,000 residents this really isn’t such a large number, it’s almost insignificant. In 2008 the number of Power of sales that were sold during the year was around 150 or approx 13 a month, seems fairly standard. However, particularly towards the end of the year and in early 2009 the number of listings of Power of Sale properties more than doubled with a high point hitting 63 properties on the market at one time. It’s not so much the overall number of properties but the % increase that I find troubling.

So now that you find the recession is over, the natural conclusion would be that the number of homes being listed and sold under the Power of Sale process would be dropping substantially. Here is the most troubling statistic, so far in 2010, 76 homes listed on the Barrie real estate board have sold under the Power of sale process. That’s an average of 25+ a month, this is double what they were in 2008 and higher than the numbers of 2009. If we project that across the rest of the year we will see an unprecedented 300+ homes sold via the banks; concerning to say the least. As of the date of this blog post there are currently 46 homes for sale on the Barrie real estate board listed as ‘Power of Sale’. This seems to be the new ‘normal’ as for the past few months the number has consistently been in the mid 40’s.

In summary, is it possible that the bank sales are lagging the real economy? It is possible, however, if that is the case and people have stopped losing their jobs, why wouldn’t they begin to make some mortgage payments and stem the supply of Power of Sale properties. Of course it is possible that the banks have been holding off on declaring a home a Power of Sale to ensure they don’t have to increase their loan loss provisions…..No they wouldn’t do that..would they? As I mentioned above this is just one risk metric that I use to determine the health of the market. Many other indicators suggest a robust Barrie real estate market, so the next and final question might be what future influences do we have to contend with.

Questions to consider:

1. Are interest rates likely to go up or down in the next 6-12 months?  My guess is up.

2. Are taxes to the retail consumer going up or down in the next 6 – 12 months? Did someone say HST!

3. Have Buyers rushed in to take advantage of historical low interest rates, driving prices in the first quarter? Hmm, time will tell!

4. Which way is the stock market going over the next 6 -12 months? I have no idea but if you find out will you let me know!

OK, So I have ranted on enough, bottom line, it seems there will be a cooling of of the Barrie real estate market in the next few months. If you are not in a hurry to buy real estate you may want to hold off for the summer months or even into the fall market. It seems to this writer that the market isn’t going much higher immediately and some seemingly bargains may show up later in 2010.

Please understand that the opinions expressed in this article are my personal opinions and not necessarily those of Royal LePage. This article and its contents should not be used as investment advice or for speculation in the barrie real estate market. If you wish to discuss any of my views in person please do drop me a line or call.

Best Regards

Ian Hocking

Sales representative

705 791 4837

Filed under: BarrieBarrie Real EstateDistrictEsssaInnisfilInvestment Real EstateOro MedonteSpringwaterStatistics

Like this post? Subscribe to my RSS feed and get loads more!