Kingston real estate is among the hottest in Canada today. Home prices have surged 34 per cent year-over-year, while residential sales have surged 90 per cent over the last 12 months. A blend of strengthening demand, tightening supply, historically low interest rates, and changing homebuyer trends have led to one of the most prosperous periods for both Kingston and the broader Ontario real estate markets.
Is relief on the way for homebuyers? The latest figures suggest that supply is tighter than ever before in the southeastern Ontario jurisdiction, and demand remains solid. But, with the housing affordability crisis intensifying, will Kingston see a decline in homebuyers? The town had been a market segment for city dwellers wanting to get more bang for their buck: more space at a lower price. But, the once-in-a-century public health crisis has spurred some dramatic shifts.
It is unclear as to how long Kingston’s housing market can sustain this heightened momentum, but the local economy is certainly benefiting from the housing boom.
Record-Low Supply Leaves Kingston Real Estate Market Tighter Than Ever!
According to the Kingston and Area Real Estate Association, residential sales edged up 1 per cent year-over-year, totalling 521 units in June. Although it was only five additional unit sales compared to the same time last year, this set a new sales record for June.
Year-to-date, home sales hit a record high of 2,593 units. This is up 51.9 per cent from the first six months of last year. Moreover, Kingston real estate sales climbed more than 10 per cent above the five-year average and nearly 20 per cent above the decade average for June.
Kingston housing prices have also enjoyed double-digit gains, advancing at an annualized rate of 27.3 per cent to $582,179. In the first half of 2021, the average price for a Kingston home was $575,927, up 33.8 per cent from the same time a year ago.
Kingston is witnessing tight inventory like many other major urban centres and rural communities in the Ontario real estate market. In June, the number of new residential listings tumbled 5.3 per cent to 645, while active residential listings plummeted 37.5 per cent to 471 units on the market. Moreover, new listings were only 0.7 per cent above the five-year average, while active listings were an astonishing 50.4 per cent below the five-year average.
The months of inventory, which speaks to the number of months to exhaust housing stocks at the current pace of sales, fell to 0.9 at the of June. This is down 1.5 months at the end of June 2020 and below the long-run average of 3.8 months for the month of June.
“Sales activity has been on a tear since the market came back to life last summer, with home sales this past month reaching a new record for June,” said Mat Clancy, President of the Kingston and Area Real Estate Association, in a news release. “The most incredible part of the sales story isn’t how strong demand has been, but rather how sales have managed to sustain such high levels in the face of record-low supply. Many other markets have seen a tapering of sales activity due to a supply crunch but somehow, we keep chugging along and setting new records. With available listings trending at rock-bottom levels and no relief in sight from a boost in new listings, it may only be a matter of time before supply bites here as well, so that’s something to keep an eye on.”
Is fresh supply coming to the Kingston real estate market? The numbers are encouraging. According to the Canada Mortgage and Housing Corporation (CMHC), housing starts totalled 58 in June, down from 76 at the same time last year. However, year-to-date, housing starts have increased to 552, up from 382 in the first half of 2020.
So, what are the industry experts anticipating on Kingston and the broader Ontario housing market in the second half of 2021?
A Look at the Second Half of 2021
Can the Kingston housing market sustain the upward momentum? While demand is solid and limited inventory could support higher price growth, a new study has triggered some consternation in the overall Ontario real estate market. According to a new poll by the Ontario Real Estate Association (OREA), close to half of the province’s residents under the age of 45 are thinking about leaving Ontario to afford a home. In addition, the study revealed that 46 per cent of potential homebuyers have considered or are considering exiting the province to purchase a home elsewhere in Canada, with one-third of people under 29 “definitely” or “very likely” to buy outside the region.
“The lack of housing supply is leading many to look outside the province for their first homes and that will make it difficult to retain and attract talent in Ontario in the near future,” OREA CEO Tim Hudak said in a statement.
This comes as two-thirds of non-homeowners express a desire to own property, the report highlighted. This figure shoots up to 80 per cent for Canadians between the ages of 18 and 29.
For years, the Kingston real estate market served as an affordable option for families unable to acquire homes in the Greater Toronto Area (GTA). However, in the aftermath of the coronavirus pandemic, major urban centres, suburbs, and rural communities have experienced tremendous sales and pricing growth. First, it was Toronto that had faced an exodus of sorts. The question lingers as to whether or not other local markets province-wide will endure the same fate in the months to come.