Once the coronavirus public health crisis occurred, there had been a lot of speculation as to what industries would suffer the most. Ontario was a very affected province in the nation, and as the economic engine of Canada, many analysts and investors paid close attention to the Canadian housing market and the fallout of the COVID-19 pandemic. The province and the rest of the country are reopening, and the virus outbreak is continually subsiding. The data can inform us as to what sectors were able to successfully weather the economic storm clouds and what sectors struggled under the weight of lockdowns and strict social distancing guidelines.
One specific industry that fared surprisingly well was Ontario real estate. After a couple of months of muted activity, most of the province is already rebounding and leading the overall Canadian housing market. And one key market in Ontario is moving on from the coronavirus with commendable gusto: Peterborough.
Before the pandemic hit Ontario, Peterborough had already been one of the hottest real estate markets in the province, with rising prices and healthy sales activity. Peterborough has enjoyed a robust market that has appealed to homebuyers and investors across the region. So, will Peterborough maintain these bullish trends in the post-coronavirus economy? All the data point to one crucial fact: Peterborough is heating up!
Canadian Housing Market: Peterborough Heating Up!
Amid stay-at-home orders and stringent social distancing guidelines, Peterborough and the Kawarthas Association of Realtors (PKAR) warned in April that COVID-19 would likely cool off Peterborough’s active real estate market. But data suggest that PKAR might have been a bit too pessimistic about the fate of the city’s housing market, with statistics alluding to a resilient market that may have already missed the eye of the storm.
Mid- to late-March and April were spend in lock-down, however May 2020 (the most current data available) brought more signs of life. Unit sales down by 17% year over year (YOY), numbering 774 units. Meanwhile the average price of homes sold in Peterborough rose 22.3% to a record high $545,942 YOY.
One of the contributing factors for the spike in housing values is that inventory levels are so low.
Like many Ontario real estate markets, listings in the region declined 40.9% in May 2020 YOY, with 303 new residential listings and 538 active residential listings at the end of May – a record low and down 29.9% YOY.
“The fact that the average price in our local market shot to such an extreme new record underscores how strong underlying demand is,” said Charina Payne, the association president, in a market update.
Another identifying trend that is stirring attention is the influx of buyers from across the Greater Toronto Area. The GTA is playing an integral role in Peterborough’s recovery, noted Payne in an interview with My Kawartha, as homebuyers seek to take advantage of its rural and waterfront areas.
Peterborough Joins the Broader Market Boom
Canada’s top mortgage insurer warned in its May housing outlook that the market could experience a correction of as much as 18% over the next 12 to 18 months. The CMHC warned that housing prices would not return to pre-pandemic levels until 2022 at the earliest. The grim assessment generated a lot of controversy, particularly among top industry insiders and observers.
From a wider perspective, a factor that could be contributing to booms across various Canadian housing markets is the current low cost of borrowing. In March, the Bank of Canada (BoC) brought down interest rates to historic levels, currently sitting at 0.25 per cent. It has never been cheaper to take out a mortgage, upgrade and increase your mortgage, or any other type of loan.
Before the public health crisis, employees were required to travel to Toronto and other large cities for work. Today, things have changed as companies are adopting work-from-home platforms to assist in adapting to the new landscape. If remote work is the new norm, young professionals can choose to live and buy real estate anywhere in the province – including more remote locations such as Peterborough.
Whether it is in Toronto or outside of the GTA, first-time homebuyers are seeing opportunities to achieve the Canadian Dream away from The Six. Indeed, technology has played a prominent role in allowing real estate agents to endure the impacts of the coronavirus, and now the digital economy is helping young families leave the big city and settle down in rural life.
It could be time to take a break from the concrete jungle and enjoy a breather on the shores of the Kawartha Lakes. Peterborough awaits you!