The Barrie real estate market has been one of the top performers in the overall Ontario housing sector. From impressive sales activity to strong price growth, Barrie has benefitted from the so-called exodus from cities and the supply-demand imbalance, resulting in significant gains across the board.

As 2021 came to a close, the Barrie housing market witnessed a modest slowdown in residential sales, but sellers enjoyed double-digit year-over-year price hikes across all property types. But is this sustainable, as we head into a year of expected interest rate normalization?

It could be challenging to forecast, since demand has been exceptional throughout the coronavirus pandemic. And, as some recent data suggest, people across all income categories are going to extreme lengths to achieve the Canadian dream of home ownership.

In the meantime, how did Barrie real estate perform? Let’s take a look at the most recent figures emerging from this southern Ontario real estate hotspot.

Sales of Barrie Real Estate Slow as Supply Hits Record Lows

According to the Barrie & District Association of REALTORS® Inc, residential sales tumbled 10.3 per cent in November from the same time in the previous year, totalling 394 units. In the first 11 months of 2021, residential transactions soared 11.5 per cent year-over-year to a record 5,860 units.

Despite the noticeable decline in the Barrie real estate market, home sales were nearly seven per cent above the five-year average and more than 12 per cent above the decade average.

On the price front, the MLS® Home Price Index (HPI), which industry observers contend is more accurate than average or median price measurements, advanced at an annualized rate of 36.8 per cent to $809,400. That said, the average price of homes sold increased 33.9 per cent to $920,273 in November. Plus, the year-to-date average price jumped 30.5 per cent compared to the first 11 months of 2020.

Here is a look at the year-over-year benchmark price gains among the different residential categories:

  • Single-Family Homes: +36.9% to $849,100
  • Townhome / Row Units: +35.7% to $576,100
  • Apartments: +36.2% to $496,300

“Although not quite matching the frenzied pace of sales activity from last year, home sales are still on the rise and remain well above historical levels for this time of year,” said Chantal Godard, President of the Barrie & District Association of REALTORS®, in a news release. “New listings have also been on the rise over the course of the fall but are well short of meeting the current pace of demand. As a result, overall inventories continue falling to new record lows and the extreme imbalance between supply and demand is pushing MLS® Benchmark Price growth further north of 30% year-over-year.”

Indeed, the number of new listings dropped -10.4 per cent to 422 units, the lowest number in the month of November since 2016. In addition, active residential listings plunged 39 per cent to 241 units, which was also the lowest figure for this time of the year in more than a quarter-century.

On a historical basis, new listings were 14.1 per cent below the five-year average, while active residential listings were 67.7 per cent below the five-year average.

Moreover, months of inventory clocked in at 0.6 at the end of November, down from 0.9 months the same time in 2020. This is an important representation since it shows the number of months it would take to sell current stockpiles at the present rate of sales activity.

But more supply is coming online, with new housing construction on the rise. According to the Canada Mortgage and Housing Corporation (CMHC), housing starts climbed by 113 per cent in November from last year. The increase is comparable on an annualized basis as year-to-date housing starts topped 2,000 in November.

A New Concern in the Barrie Real Estate Market?

Ever since the U.S. housing crisis more than a decade ago, many experts grow concerned whenever the term “subprime borrower” enters into the mix, as it suggests a bubble and a potential problem should interest rates rise.

A subprime borrower is a high credit risk consumer possessing a low credit score.

New Equifax data show that during the July-to-September period, there was a  considerable jump in the number of Canadian real estate markets with high percentages of new mortgages issued to borrowers with subprime credit ratings.

The Windsor real estate market topped the list (6.8 per cent), followed by Moncton (6.4 per cent), and Niagara (6.3 per cent). But Barrie took the seventh spot in the third quarter, with 5.8 per cent.

While the major urban centres saw a sharp increase in subprime borrowers, the suburbs, small towns, and rural communities are making the list of over-leveraged borrowers. Suffice it to say, more borrowers with bad credit are getting approved for mortgages they cannot afford.

This could become worrisome for some markets that have witnessed incredible growth in the housing sector, particularly when the Bank of Canada (BoC) begins raising interest rates sometime this year.