Prior to the COVID-19 pandemic in spring 2020, the Kingston housing market was delivering strong growth across nearly all of its metrics. The average price of houses sold in Kingston last summer was valued at $405,000-$410,000, an increase of 15 per cent from the year prior. The growth rate was more than nine times Canada’s average, more than double Ontario’s average, and surprisingly more than three times the growth the GTA saw in the same time period.
Then, everything changed. In March of this year, Canada saw a countrywide shutdown in response to the coronavirus. Like other real estate markets in North America, Kingston saw a significant drop in total home sales. For example, the MLS System of the Kingston and Area Real Estate Association noted a decline of 59.2 per cent year-over-year for Kingston home sales in April.
Fortunately, the Kingston housing market is projected to start reversing this downward movement over the next 18 months. Buyers and sellers are expected to return gradually over the coming months, and as the city has thrived in the months following past recessions, so it will again.
Why Kingston’s Housing Market Had Such Momentum
Housing markets are a constant game of supply and demand. Kingston’s local market benefited from an average to high demand and a very low supply of available homes. In 2019, the available real estate and housing supply in Kingston was at its lowest levels since 1989.
Add to that the high demand for a home in Kingston. In December of this past year, the RE/MAX Housing Market Outlook Report for Kingston projected the average residential sale price to rise by six per cent this year, attributed to the high demand and a levelling off of record growth experienced in recent years.
There’s also an affordability aspect to buying in Kingston compared to a hub like Toronto, where the average real estate price is three or four times what exists in Kingston, particularly if you’re searching for single-family detached homes.
How COVID-19 Has Changed Kingston Real Estate
A dramatic drop in various Kingston housing market metrics has been attributed solely to trepidation on the part of both buyers and sellers in the current pandemic landscape.
Fortunately, the quick action of the federal government in implementing programs such as the Canadian Emergency Response Benefit (CERB), student support programs and more, has protected Kingston’s housing market in a big way.
For the most part, residents have continued paying their mortgages in full, deferred, or partial payments. This is despite the fact that Kingston’s unemployment rate for April 2020 was 7.9 per cent, an increase of 2.2 per cent from the prior month according to the Kingston And Area Real Estate Association.
The optimistic outlook, however, is that the dramatic drop in Kingston home sales is likely to only be a temporary blip.
The Canadian economy is still reeling from the economic impacts of the pandemic, but the associated job losses are viewed by economists as temporary. While some Kingston residents or soon-to-be-residents may feel less inclined to buy and sell during this period, this doesn’t necessarily translate to long-term negative consequences. Looking at past recessions and real estate downturns in Canada, the housing market has always bounced back.
What to Look for in the Bounce-Back in Kingston Real Estate
Pandemic or no pandemic, Kingston’s housing market is still growing. New constructions in key neighbourhoods – Woodhaven, Greenwood Park-Riverside, and Lyndenwood – are moving forward.
There’s never been a better time to negotiate a mortgage for a new real estate purchase or existing ownership, though many factors go into what sort of mortgage rate one can lock in for themselves. This is in stark contrast to the mortgage stress test and related guidelines which impacted would-be buyers in the pre-pandemic period.
There is also growing interest in Kingston and similar regions from homeowners and buyers in COVID-19 hot spots such as Toronto. Some have predicted an ‘urban exodus’ in Ontario, as a response to living in busy and arguably overfilled areas. Kingston is a community that may benefit from such an urbanite migration.
This plays well into Kingston’s average buyer, which are families and move-up buyers whose primary concerns are safety, property value growth, and affordability.
Kingston’s Reputation in the Canadian Real Estate Market
Kingston attracts the attention of property investors and Canadian homebuyers for a lot of reasons, including many we’ve already mentioned. The city has made major investments in improving infrastructure, public transportation and transit, connecting its downtown core to other neighbourhoods, and has a welcoming business atmosphere.
Kingston’s increasing liveability combined with other metrics make it hard to believe that its housing market is going to see anything but stability and growth moving forward. Assuming the brunt of the impact of COVID-19 on Kingston’s housing market has already been seen, the second half of 2020 and into 2021 should not only be a period of recovery, but one of re-growth.
To make a definitive prediction on a percentage of growth of the Kingston real estate market would be unrealistic given current uncertain circumstances. The fact remains that Canada has conditioned itself to maintaining vigilance over the spread of COVID-19. Even if a second wave were to occur in autumn, the consequences of this would be temporary in nature.
If you are a buyer, seller, or investor, little has changed in the Kingston housing market. The conditions around which Kingston real estate has become so valuable remain. The new construction projects are moving forward. There will be supply, and there will be demand. Housing continues to be built and sold every month in the area. For all these reasons, Kingston real estate should hold strong in the next 18 months.