Coming off a hot 2020, the Kingston housing market was expected to see average prices rise nearly 10% over the course of 2021, according to the RE/MAX 2021 Housing Market Outlook Report. Led mostly by the spur of lifestyle changes due to the COVID-19 pandemic across Canada, plenty of cities and towns across the province of Ontario have experienced an increase in demand and a shortage of supply over the last 18 months. At the end of 2020, it was expected that the average house in Kingston, Ontario would rise to $510,491 by the end of this year – a number which the area has already surpassed.
Known for its 19th century architecture – aptly dubbed “Limestone City” – Kingston, Ontario is the big city that feels like a small town. Home to nearly 137,000 people, the city has recently seen an influx of residents fleeing surrounding big cities such as Toronto and Ottawa in favour of more space at a more palatable price tag. Perhaps due to its proximity to both large metropolitan cities, as well as a prestigious university, Kingston tends to draw in a diverse pool of students, families, and professionals alike.
High Demand and Low Inventory Leading the Charge for Kingston Housing Market
The first quarter of 2021 saw the Kingston real estate market maintain a blistering pace. Come April, it was only expected that the market would continue to heat up. Over the course of April, the MLS System of Kingston and Area Real Estate Association (KAREA) reported 539 homes sold – more than double the sales from April 2020; this was also a new record for the month.
With the month seeing record sales, prices were only driven up further, leading to an even tighter market: “Sales activity set a new April record and posted one of the highest levels of any month on record, coming in second only to May 2017,” said Mat Clancy, President of the Kingston and Area Real Estate Association. “New listings haven’t rebounded as strongly as sales since last summer, which has seen further tightening of already unprecedented market conditions. As a result, incredibly low levels of supply relative to demand are now driving year-over-year price growth north of 30 per cent.”
This trend was sustained through the month of May. While the month didn’t set a new record, the sales were quite high, further demonstrating that a slowing market is not on the horizon for Kingston. Clancy adds, “May’s home sales were tied for the third highest level for this month in history. Sales have shown little evidence of slowing down since roaring to unprecedented levels beginning last year.” The number of homes sold during May 2021 through the MLS System of KAREA totalled 503 units, an increase of 68.6% compared to May 2020, but a 6.68% month-to-month decrease. While home sales decreased compared to the previous month, they were still 6.3% above the five-year average and 9.5% above the 10-year average for the month of May.
Homes being swept off the market at an alarming pace combined with lack of new inventory over the last several months, have led to sky high prices and an ever-tightening Kingston housing market. While the number of new listings was up 49.7% this past May compared to one year ago, it is still well below the 10-year average and not enough to uphold the month-over-month demand. At the end of May, there was just one month of inventory – a drastic decline of the average 3.7 months typically seen at this time of year.
Mat Clancy, President of KAREA, states, “New listings have just barely managed to come back to average levels, which hasn’t been nearly enough to offset the current pace of demand. Overall inventories are still trending at record lows and with so little supply left on the market to choose from, competition among potential buyers is driving price growth of more than 40%.” The outstanding demand in the area, and lack of supply, has driven the average home price in May 2021 to $596,004 – well above the forecasted average home price for the year and a 43.7% increase compared to May 2021.
Will the Kingston Housing Market Continue to Heat Up with Summer’s Arrival?
As we shift gears into the hot and sticky summer months, it is expected that the demand in the Kingston area will continue to ease, as is usually expected this time of year. This will allow the market a brief time to recover supply and bring the average home prices down slightly; this is welcome news for first-time homebuyers who are concerned about being priced out of this local market.