Local realtors see several contributing factors in the ongoing upward spiral of area home prices.
“Home sales were solid in August, not quite as strong as the last couple of years but still one of the best August sales figures ever,” Steve Carroll, president of the Chatham-Kent Association of Realtors, said in a media release. “Strong demand coupled with record-low supply is one of the reasons prices are still on the rise in the region.”
Carroll believes this demand comes from folks moving from the high-cost market of the GTA and Golden Horseshoe, where things have slowed as a result of the “stress test” introduced by the federal government. This required people to qualify at a rate higher than the current posted rate. The idea was that it gave buyers some cushion to allow them to possibly weather a rate increase down the road.
This has not affected our area as seriously, Carroll said, where the year to date average price was $208,550, rising 12.9 per cent from the first eight months of 2017. However, out-of-town buyers continue to sell their homes and are comfortable purchasing at the more attractive prices here in C-K. Many times they are willing to over pay the asking price, which results in local buyers competing with buyers who may be in a more positive equity position, thus resulting in demand outstripping supply, impacting prices.
There were 177 new residential listings in August 2018. This was up 7.9 per cent (13 listings) on a year-over-year basis. The increase in new supply notwithstanding, overall supply is still at record lows. Active residential listings numbered just 241 units at the end of August, down 20.7 per cent from the end of August 2017.
This situation may in fact become the new normal, resulting in higher prices for entry-level homes.
It may be necessary for builders in our area to consider basic entry level homes, without the bells and whistles, to allow first time local buyers to enter the market, which may be multi-units, semi-detached, or townhouses, Carroll said.
“It is critical to provide the dream of owning a home to our local clientele, who desire home ownership,” he said.