Known for its beautiful waterfalls and extensive number of wineries, the Niagara Region has something for just about anyone. Whether you are a young professional, a growing family or a retiree, Niagara has it all. The region is a collective of smaller cities and towns, home to just under 448,000 residents. This means homes are not built on top of one another and high-rises are few and far between. These factors, among others, have put Niagara real estate in high demand.
The COVID-19 pandemic has changed what many people deem to be essential. While it used to be ideal to live closer to major cities – specifically the Greater Toronto Area – due to proximity to the office, it is now desirable to live further away from the city as many companies transition to remote work environments.
Influx of Buyers Driving the Niagara Housing Market
Closing out the first quarter of 2021, residential home sales totalled 1,081 units in the Niagara region, an increase of 102.9% compared to March 2020. These sales were driven mostly by new residents looking to escape the concrete jungle and enjoy more space. “The spring market is here as evidenced by the brisk sales numbers in March. We are seeing a continued influx of buyers who are able to work remotely and families looking to move from attached units to detached properties coming to Niagara. Although supply has also increased, demand has outpaced it,” said Terri McCallum, President of the Niagara Association of REALTORS®.
As spring surged forward, home sales only increased. The MLS system for The Niagara Association of REALTORS® reported 1,082 units sold in April 2021. When comparing that to the numbers posted in April 2020, the market experienced an outlandish 292% increase. While this increase is extensive, it is important to analyze the qualitative factors that may have contributed to these record-breaking numbers.
Back in April 2020, Ontario was in the thick of its first lockdown, meaning the real estate industry had drastically slowed down. Terri McCallum states, “The April 2020 to April 2021 comparison emphasizes the negative impact Ontario’s first COVID lock-down had on the province’s economy including Niagara, but also shines a light on the market’s dramatic recovery and the desirability of Niagara Region as a place to call home. Of particular significance is the continuing interest in and growth of the communities located along the shores of Lake Erie and those in the southern half of the Niagara Region.”
This past month continued to be driven by a trend of high unit sales, with 941 units being sold in May 2021. While this is a slight decrease compared to the previous month, it is still a 94.8% increase compared to May 2020 – proving that current unit sales are continuing to outshine last year’s figures.
Demand for Niagara real estate continues to outstrip supply, leading to minimal turnaround between listing and selling for properties. In March 2021, the average days to sell a home in the area was 16 days, in April 2021 it was 15 days, and most recently in May 2021 it has dwindled down to 14 days. Compared to April, this past month saw a slight decrease in the number of new homes listed; 1,329 new homes were listed in April 2021 but May 2021 only saw 1,246 residential properties listed. With supply not being able to keep up with demand, homes are being sold at sky-high prices for the region. When comparing year-to-year prices, the overall MLS® HPI composite benchmark price for the Niagara Region was $648,100 in May 2021 – an increase of 40% compared to May 2020.
A Hot Summer Ahead for Niagara Real Estate
As the summer months move in, it is reasonable to expect another increase in home sales in the Niagara Region due to typical summer market demand. Should new listings continue to be outpaced by sales, the average price in the area will also continue to climb. With no sign of interest rates increasing, home owners will continue to be willing to buy homes at the higher price. However the new mortgage stress test rules which came into effect on June 1st, may help to put a cap upon price growth, and may potentially soften the fiery demand in the Niagara housing market in the months ahead.