So some good news for Buyers and not so great for Sellers. The last few weeks are starting to confirm what we have been saying for the past few months. Come July 1st , expect Barrie home prices to level off and maybe even dip into the early fall market. although not a qualitative measurement, my pager these last few weeks has been pinging away, not with new listings or a rush of eager buyers, but with price reductions. There are typically several phases in the Barrie Real Estate year. Phase 1 begins with an expectation that a new year brings higher prices, followed by an active spring where those prices are justified, a quieter summer where people head for the cottage followed by
a renewal in activity in mid to late September as buyers and sellers try to move before the Christmas holidays and the onset of snow.

The past few years, however, could be called anything but normal as gyrations in  global equity markets and housing bubbles elsewhere have made it difficult to predict where pricing should be. This year has been no exception although perhaps a little more normalized than the last few. This year we had a number of factors driving Buyers, perhaps artificially, early on in the year. There is a phrase that says that if enough people believe something to be true then inevitably it becomes true. So in the Barrie Real Estate market we had several factors that people were fearful of, enough to create an order in-balance at the beginning of the year. Namely, a fear about the effects that HST will have on housing and also a fear about interest rates rising. So here are the facts, yes HST will be implemented in just a few days time, as expected and yes interest rates went up recently to the heady heights of….4.5%!  For those of us old enough to remember interest rates at 8, 9 or even 15 % the though of rates around 4.5% is somewhat of a bargain. The fact that the market could get steamed up with the thought of rates moving from  4 to 4.5% is also very concerning. The most that anyone has likely locked themselves in for is a round 5 years and that’s great! I mean why not take advantage of rates at 4% instead of 4.5%, but if the 4% works and 4.5% or 5% doesn’t work, then maybe you should be thinking twice about having a mortgage in the first place. It is almost certain that in 3-4 years, rates will be higher than where they are now, likely 5%+ as the effects of an over stimulated economy create an inflationary environment. However, fear drives people and of course we don’t know how high rates may be going right this minute. So back to the point. The fear of rates going up and HST created a situation where Buyers felt they needed to act sooner rather than later, so they did. In the Barrie Real Estate market this created a bulge in the number of transactions at the beginning part of the year.

On top of this the government has also introduced the investor rule that says investors or non owner occupiers to give it the correct term, must have 20% to put down. This undermines the $200,000 price bracket of homes as there aren’t as many investors to go round. Ergo, less Buyers = less demand = price stagnation.

Add all three together and you have the perfectly combined stagnation in the housing market, or do you?

The Buyers of course are only one half of the equation, what about the Sellers? The Sellers typical pattern during the year is to automatically believe that the value of their home has gone up by 5% as soon as the snow melts in February and baring unforeseen events in many years that is exactly what happens. This year in the Barrie Homes market following the 2009 wobble, home prices inched higher, however, due to the bunching of Buyers  for previously mentioned reasons, the inventory was snatched up at record speed, leaving a lack of good listings and creating a ‘Sellers’ Market. Prices rose as Buyers started to compete for the good listings that were around until those potential Sellers who were waiting to see what the market would do woke up and decided to sell.

The press then plays its part nicely by fulling the speculation and reporting record sales numbers etc and also, slightly misleadingly in this writers opinion, comparing the brisk level of sales vs the same period last year. If you remember the Barrie Real Estate market in Spring 2009, it wasn’t exactly brisk, and of course if you compare a very brisk 2010 with a very subdued 2009, the comparison is going to look very strong. The Buyers hearing the press reports get themselves into a bit of a frenzy and a number of multiple offers are reported. Working for many Sellers I can honestly say I have never dealt with so many multiple offers as I have done so far this year.

As of this writing, June 26th, the Barrie Real Estate market is now in a position where prices have been artificially pushed by all of the above and the Buyers have now completed most of their buying needs. At least for the foreseeable future (2-3 months) the Buyers are done and the Sellers are left wondering who turned the lights out. This doesn’t mean that all the buyers have vanished, but what it does mean is that the multiple offer days are likely behind us and the Sellers coming to realize this have started to return to a more normalized market as opposed to waiting for Buyers to bid up. Bottom line, expect the next few months while we digest the listing inventory to  be a quiet period, and for Sellers to lower their prices back to a more steady pace.

Baring any more hicups from the financial markets we expect the Barrie Real Estate market to settle down and for prices to perhaps even ease back. If prices ease back we expect maybe 1-2 % before the latent demand comes back for the fall market.

If you would like to discuss the Barrie Real Estate market or you are thinking of selling your Barrie home in the near future please give us a call for a confidential discussion.

Ian Hocking

Filed under: Barrie Real Estate

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