So here we go again? The question mark was deliberate as to be honest, I’m actually not sure this time around. Two years ago we were warning our readers that the Canadian housing market, and yes Barrie as well, would suffer over the coming year or two and it was likely that there would be some form of slow down or sell off in house prices. So here we are, August 19th and we are looking at worse than forseen wholesale trade and leading indicators. Barrie Real Estate - Economic effects!

So what you might ask, and exactly what does that have to do with the Barrie real estate market? First off you need to understand that these numbers are not one off’s. If it were just a bad number or worse than expected we might not be giving this much more than a cursery glance, however, for the past 3 -4 months the economic data has been suggesting that the economy may be starting to head towards a slow down. If you are not sure exactly what these numbers mean please google them and you will find heaps of economists only too eager to give you the run down. However, in a nut shell, Leading indicators can be thought of as a set of economic prinicpals that are supposed to give you leading information about where the economy is going. A lower number means less forecast growth and a higher number generally means a good feeling in the economy supported by higher growth ahead. Wholesale trade is trade being conducted at athe wholesale level as opposed to Retail. If major buyers and Sellers of produce are cutting back their orders it is likely a sign that the consumer is not buying as much or is showing signs of negative future buying trends. Bear in mind that the consumer in this case can also be major company purchases of raw material.  So Wholesale trade fell 0.3 % in June from May and Leading Indicators posted the slowest increase in a year at 0.4% in July from 0.7% in June. Having said all that, if you were in the Barrie Real Estate area on Bayfield street last weekend trying to battle your way through the stores you would be forgiven for thinking there was any sign of a further slowdown! Barrie Real Estate - Slowdown not quite here yet

Is the tail wagging the dog?

The tail in this case is housing and the dog the economy. Building materials registered as one of the 4 declining wholesale sectors and the housing index fell 4.1%. Not surprisingly the demand for furniture and household related goods such as appliances also weakend in the leading indicators. it is likely that the second quarter GDP growth will be 50% less than in the first quarter and that continued weakness will see growth further decline later in the year. Looking locally at the Barrie real estate market as of the date of writing this post the number of homes sold year to date in 2010 is within 20 of those sold in 2009. No great diasaster there! However, 2006,2007 and 2008 saw approx 10% more home sales by the same period in the year and don’t forget that there are physically more homes in the Barrie real estate area now then there were a few years ago. Slow down, absolutely, collapse…hmmm not so sure. The numbers were unchanged! That’s not so bad, our friends to the south in some neighbourhoods have periods where no houses are sold at all, so relatively speaking, still not the end of the world.

Of course the positive impact of a slower economy is that interest rates will more likely be held at the current rates than increase, keeping housing more affordable to those who are starting off for the first time. The government has certainly taken the wind out of the housing markets sails as we reported in earlier blogs. Tougher lending criteria, a crack down on investors being able to afford homes and more regulation for self employed people making it more difficult to borrow. It should be noted that Canada has a high percentage of self employed workers so any effect on that group will feed through. Ontario and Barrie once again will feel the brunt of any slowdown as our economies are still tied to exports and manufacturing of the auto sector. The Barrie commercial real estate market is already showing alarming signs with some 25%+ of commercial and light industrial space being vacant in the town. There is also a plethora of vacant land to build on designated commercial. Park Place in Barrie opening phase one next summer is also likely to add to the vacany rates.

We will continue to monitor the situation within the Barrie Real Estate market, our take for now is that with interest rates low and likely to stay low and foreclosure rates staying higher than normal the market here is capped for the time being. We will let you know if we feel that balance is changing, the outlook for the next 3-6 months would be a cautious one, not expecting any major downturn, just cautious. The Buyers may be back in control later this year!

If you would like to discuss any of these comments or wish to talk about how this may affact your home, please don’t hesitate to give us a call.  Ian 705 252 7939

Filed under: Barrie Community InformationBarrie Real EstateSimcoe CountyStatistics

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