It has been more than a year since the COVID-19 public health crisis infected the Canadian economy and left millions of people out of work. But while this has been a trying time, the Ontario real estate market – and the broader national industry, too – has been one of the few bright spots throughout the pandemic. Moreover, the Bank of Canada (BoC) has conceded that the housing boom has supported the economic recovery. But has the real estate boom gone too far and made homeownership unachievable for the young generation of homebuyers?
For the last decade, families have been fleeing the big cities as property prices soared beyond attainable levels. Instead, they relocated to smaller municipalities just outside the major urban centres and rural communities promising cheaper housing and more square footage for your dollar. However, now that sky-high real estate prices have seeped into the small towns, first-time homebuyers are unsure what to do or where to go.
The Northumberland Hills real estate market, tucked away in Cobourg, could be one of the few remaining options for new Ontario homebuyers. Although the housing market in Northumberland Hills has joined the broader rally, it is still considerably more affordable when compared to Toronto, Hamilton, and other areas of the GTHA. But for how much longer? The April data might shine some light on that question.
More Record-Setting Activity in the Northumberland Hill Real Estate Market
According to the Northumberland Hills Association of REALTORS® (NHAR), residential sales spiked 177.6 per cent year-over-year in April with 136 units. Year-to-date, home sales have jumped 50.7 per cent for a total of 455 units.
This is an incredible and historic increase as home sales were 24.3 per cent above the five-year average and 18.8 per cent above the ten-year average for the month of April.
It is not only sales activity that is seeing record-breaking gains. Residential prices are continuing to skyrocket, too. In April, the overall MLS® Home Price Index (HPI), which industry experts say is more reliable than average or median price measurements, rose at an annualized rate of 38.2 per cent to $641,800.
The benchmark price for single-family homes climbed 38.5 per cent year-over-year to $653,400, while the benchmark for townhomes jumped 33.5 per cent to $446,000. The year-to-date average for residential properties in Northumberland Hills advanced 41 per cent from the first four months of 2020 to $800,259.
In total, the dollar value of all home sales in April skyrocketed 373 per cent to $118.4 million.
“What a difference a year makes!” said Susan Hull, President of the Northumberland Hills Association of REALTORS®, in a news release.
“This time last year we were adapting to the new realities of COVID-19 and adjusting to a once-in-a-generation shift in how our industry conducts business. Fast forward a year to April 2021 and MLS® home sales have posted the third best April numbers in history, surpassed only by the totals posted in the pre-mortgage stress test era of 2016-2017 – a remarkable accomplishment considering the circumstances we have all faced this past year. New listings continue at a strong pace which is helping to backstop overall inventory. However, strong competition for properties continues to put upward pressure on prices, pushing benchmark prices above the $640K mark.”
Could fresh housing stocks curtail the impressive performance in the Northumberland Hills real estate market?
A Look at the Housing Supply in Northumberland Hills
Real estate agents and market analysts are combing through supply metrics, such as new and active listings, to gauge where the housing sector could be heading.
The number of new listings in this local housing market increased 127.2 per cent to 184 new residential listings, which is approximately six per cent above the five-year average. Meanwhile, active residential listings dropped 35.7 per cent to trend at their lowest levels in about three decades. At the same time, experts note that they may have bottomed amid easing market conditions.
That said, housing stocks are at ultra-low levels, with months of inventory numbered at one, down from 4.2 months at the end of April of last year. This is also below the long-run average of 3.3 months for this time of the year. The Canadian real estate market relies on this data point because the number of months of inventory shows how long it would take to sell present supplies at the current activity rate.
Housing starts in the Cobourg area are beginning to climb compared to last year. According to the Canadian Mortgage and Housing Corporation (CMHC), housing starts totalled 35 in the first quarter of this year, compared to just three in January-to-March period of 2020. From 185 in Q1 of last year to just 30 in the three-month period this year, housing completions are significantly down.
Small-Town Ontario Still Performing Well
Fourteen months into the coronavirus pandemic, real estate markets of small towns across Ontario have remained strong. While major urban centres have continued to soar under these current market conditions, it is the suburbs, small towns, and rural communities that have generated comparable sales and valuation gains. Despite prognostications that the Canadian housing market may have peaked, the province’s real estate sector is still in the midst of an affordability crisis. Demand is still intensifying, supply is limited, interest rates continue to be historically low, and homebuyer trends are leaning toward additional space in smaller places, even in the post-coronavirus recovery.
The Northumberland Hills real estate market remains an attractive town to plant new roots, settle down, or take advantage of the beautiful scenery. Be it a boom or bust, the breathtakingly scenic and quaint Northumberland Hills and the broader Cobourg area holds enough of an attraction factor to lure homebuyers well into the future!