Investing in Barrie Real Estate: A Lucrative Opportunity

The Barrie real estate market has rebounded at a significant pace since last year despite rising interest rates and a slowing economy. But can this component of the Ontario housing sector maintain its momentum in the home stretch of 2023 and heading into 2024?

This is the $824,900 question for market observers. According to the Barrie & District Association of REALTORS® Inc., residential property sales soared nearly 24 per cent year-over-year in June, totalling more than 400 units. Year-to-date, home sales have totalled just below 2,100 units, down 14.3 per cent from the same time a year ago.

On a historical basis, home sales were 14 percent below the five-year average and more than 18 per cent below the ten-year average for this time of the year.

But what about prices?

They have eased from last year, real estate association data show. In June, the MLS® Home Price Index (HPI) tumbled at an annualized rate of 8.5 per cent to $824,300. The average price of homes sold in June dipped nearly one per cent to $906,303.

All three residential property categories declined to finish off the second quarter of 2023:

· Single-Family Homes: -7.9 per cent to $871,600

· Townhomes: -8.8 per cent to $602,800

· Apartments: -9.4 per cent to $549,100

“Home sales have been coming in relatively stronger over the past three months compared to earlier in the year, slowly building momentum in the recovery,” said Lindsay Percy, the Chair of the Barrie & District Association of REALTORS®, in a statement. “A surge in new listings in June helped to sustain this momentum, although whether this is the beginning of a reversal in the downward trend in new supply or just a one-off remains to be seen. The return of sellers to the market in meaningful numbers would be a welcome sight given falling inventory levels and rising prices.”

But do these numbers mean a lucrative opportunity exists in the Barrie real estate market for prospective homebuyers and investors?

Investing in Barrie Real Estate: A Lucrative Opportunity

The latest data presented a mixed picture of the Barrie real estate market, as industry experts have been looking at multiple trends that may support price growth or weigh on the upward trend in the last three months:

· Supply

· The return of buyers and sellers

· Interest rates

In June, the number of new residential listings plunged close to 26 percent, totalling 846 new units. Active residential listings declined more than 22 per cent, with 914 units on the market to finish June. Historically, new listings were nearly nine percent below the five-year average, and residential listings were more than nine percent below the five-year average.

In addition, months of inventory dropped from 3.6 months in June 2022 to 2.3 in June 2023. This measurement assesses the number of months it would take to exhaust current inventories at the present rate of sales activity.

At the same time, new housing construction activity levels have been exceptional this year. According to the Canada Mortgage and Housing Corporation (CMHC), housing starts surged 53 per cent year-over-year to 466 units in June. Year-to-date, housing starts have climbed by 25 per cent from June 2022 to 1,462 units.

Meanwhile, the Bank of Canada’s (BoC) tightening cycle could be nearing its end, but it might not mean that interest rates will begin falling before the year is over. In July, the central bank raised the benchmark policy rate by 25 basis points to five percent, the highest level in over two decades. With the consumer price index (CPI) coming in higher than expected in July, there are expectations that the BoC might raise interest rates at the September policy meeting, especially considering that officials do not believe inflation will return to the institution’s two percent target until the middle of 2025.

This, of course, results in higher borrowing costs for homebuyers. According to Statistics Canada, the CMHC five-year conventional fixed-rate mortgage rate increased to 5.99 per cent last month, up from 5.85 per cent in June.

That said, despite rising mortgage rates, experts believe that homeowners can withstand the current rising-rate environment, even nearly as all of the rate increases since early 2022 have begun to be felt.

“Next summer will be an important milestone for the Canadian housing market, as we head into the period where the bulk of interest rates increases from last year start to be felt. The sharpest increases in rates occurred in the summer of 2022, and it typically takes up to a year for the economy to feel their full impact,” wrote Mathieu Laberge, a partner and leader of economics and policy at KPMG Canada. “Nevertheless, Canadians are in a good position to manage their personal finances and exposure to the housing market: the Canadian labour market remains steady, meaning Canadians have the possibility to make trade-offs between discretionary and nondiscretionary spending. And inflation is keeping to its moderating trend, recently dipping below three per cent.”

Ultimately, with the Barrie real estate market seeing a wave of buyers and sellers, Simcoe County could maintain a lucrative investment opportunity climate.