Who would have envisioned a year ago that suburbs, small towns and rural communities in Ontario would perform as well or even better than Toronto, North America’s fourth-largest city? In fact, at the beginning of the COVID-19 public health crisis, many had predicted that real estate prices – nationally and provincially – would crash in the wake of the first wave. But the opposite occurred in the months that followed. Despite a few weeks of sluggish activity and lacklustre growth, the Ontario housing market ballooned in 2020, and the early indicators suggest 2021 could be a repeat performance of this stellar boom. One of these small communities that experienced monumental growth: the Woodstock-Ingersoll real estate market.
Many homebuyers have been leaving the major urban centres for their smaller counterparts. Suffice it to say, some of these more rural markets were not prepared for the influx of demand. In a municipality like Woodstock-Ingersoll, housing supply has been exhausted, with prices skyrocketing as a result. Industry observers warn that there is no relief in sight, turning the town into a seller’s market. But could the record-low inventory levels, coupled with soaring valuations, serve as barriers to entry for newcomers?
Dwindling Housing Inventory Stalls Activity in Woodstock-Ingersoll Real Estate Market
The lack of inventory is driving up prices in Woodstock-Ingersoll, turning it into a strong seller’s market. But while sales activity was rather minimal in 2020, the average price for residential properties experienced double-digit growth to cap off the year.
According to the Woodstock-Ingersoll & District Real Estate Board, residential sales climbed 3.2 per cent year-over-year in December, a record for the month. But home sales dipped 0.2 per cent on an annual basis.
In December, the benchmark price for single-family homes soared 32.4 per cent from the previous year, to $499,800. Townhouse or row units also climbed 22.8 per cent to $308,808. In total, the dollar value of all homes sold in December increased by 35.2 per cent to $54.3 million.
Active residential listings declined at an annualized rate of 74.6 per cent at the end of December. New residential listings tumbled 6.3 per cent to 59 units, marking the lowest level for the month of December in two decades. The months of inventory – the number of months it would take to sell present inventories at the current rate of sales activity – came in at 0.5 to finish 2020, below the long-run average of 5.1 months.
“Home sales set another record in December, which is no surprise given the recent trajectory of sales activity. For the year, we came in just four sales shy of the second-highest annual sales on record,” said Lesley Michie, the President of the Woodstock-Ingersoll & District Real Estate Board, in a statement.
Indeed, many properties in the region are off the market within just days of being listed. In other words, if buyers see a home they like in this seller’s market – whether it’s a detached, semi-detached or townhouse – they should submit their bid.
So, is the local Woodstock-Ingersoll real estate market primed to experience the same trends in 2021?
The Year Ahead for the Woodstock-Ingersoll Housing Market
As the Bank of Canada (BoC) keeps interest rates near zero, borrowing money has never been cheaper, which is attracting homebuyers. However, resale inventory is low and any new housing projects currently in the works might not be sufficient to offer some relief to buyers in the Woodstock-Ingersoll housing sector. And the head of the area’s real estate board agrees, noting in the group’s December report:
“Historically speaking there’s virtually no active inventory left over on the market right now – almost everything that gets listed is being snapped up by hungry buyers. With no relief in sight on the supply side we might very well continue seeing strong double-digit price growth into 2021.”
Still, the lack of housing stocks does not appear to be enough dissuade out-of-town buyers who desire to live in rural communities and small towns. This partly explains why suburban markets have been outperforming major urban centres.
Will this trend benefit homeowners in Woodstock-Ingersoll? It certainly should give sellers the upper hand, since limited supply could facilitate an environment of bidding wars. This is amplified when you factor in historically low interest rates, as well as the out-of-town homebuyers who may have sold their property for a considerable return, which provides them with additional capital to drive up the price of their suburban dream home. Another consideration is that households have an accrued $200 billion in cash savings since earnings were not consumed throughout the pandemic. Once the economy reopens, could these consumers put their capital into the housing market?
Perhaps the real estate valuations over the next 12 months will depend on how hungry buyers are for Woodstock-Ingersoll properties. Considering that housing stock is nearly sold out in these small towns in the heart of Ontario’s agricultural hub, appetites might be fierce.