Barrie Real Estate - Boom, Bust or Echo?

By
Real Estate Agent with sales representative : Keller Williams Experience Realty


Those who have been in the business of selling Real Estate in Ontario long enough toReal Estate Market 2013 remember rolodexes and cellular phones that looked more like luggage than anything else like to recount the years 1989-1990 much like our grandparents talked about the dirty thirties. 
 

They talk about how by 1990 local real estate markets which had seen one record boom year after the next and everyone expected double digit increases in home values year after year, suddenly all came to a crashing halt.

Many home owners who purchased in the previous couple years found themselves waiting another 10 or more years for the value of their properties to return to the break even point. 

Most experts point to interest rates which climbed to 14% in 1990 as the primary reason for the real estate crash of 89 - 90 albeit economists tend to look at numbers in and of themselves with little regard for the human elements a psychologist is more apt to uncover when studying a shift in human behavior as significant as was seen at that time.

 
In the late eighties the rush to buy homes and the resulting demand drove up prices not unlike what we have seen over the past number of years. That's where the story ends for much of the media today. What went up in the 80's came down, therefore it must repeat again, right?
 
One significant and often overlooked factor which is different today in Ontario is that homes are rarely built on speculation anymore. In the late eighties developers and investors were tripping over one another in a race to convert baron land into busy neighborhoods as quickly as they could get the survey stakes in the ground. The race meant there was little time to waste pre-selling the homes they were building though they were certain those homes would have committed buyers by the time the shingles went on the roof and the top layer of asphalt went down on the street. 

When the buying frenzy began to ease up in 1989 there were literally billions of dollars invested in the lands, materials, development fees and labour of thousands of unsold homes that lined the perimeter of just about every community in the Province. Picture that moment when Wilie Coyote hangs frozen a few steps over the canyon holding a sign that says "Yikes".  What we saw next was a liquidation sale of new homes like never before or since as investors and developers scrambled to recover their invested capital. In doing so they took average home prices down in self-fulfilling prophecy like fashion. 


So what is different  between where we are now in the Real Estate market in Ontario, and where we were then? Just like the 80's, housing prices have gone up at double digit rates in many of the previous ten years. Buyers have behaved in much the same fashion driving the prices ever higher, just like in the 80's. 
 
The big difference today though is most builders don't put a shovel into the ground until a buyer has written up a purchase agreement, in other words, there isn't an inventory of unsold new homes waiting to sell so their isn't going to be a big liquidation sale in Ontario if everyone decides to hold off on buying for a while.
 
Prices are levelling off and things are and will continue slowing down in previously over active markets, while growth is likely to be more selective across the country for a while. What our finance minister is calling consumer carelessness today he will once again call consumer confidence at some point and the cycle will repeat. Human (and political) behavior will always remain predictable.

Demand is driven partly by need and partly by emotions and the ratio of each is ever shifting. Canada's immigration numbers are likely to continue increasing by a million new citizens every 4 years. Emotionally the drive to upgrade to newer and bigger, be it a car or a home is not as strong as it was ten years ago.
Our largest demographic, the Baby Back yard gazeboBoomer, is thinking more today about knees and hips than the pools and hot tubs that were top of list items a decade ago.  The kids have vacated the nest. The hockey puck dented garage door has been replaced, the spot above it where the basketball hoop was mounted  now sports a satellite dish and where the back yard trampoline sat for years probably sits a gazebo today.

The shift in activity in the real estate market is as much to do with evolving needs as it is economics. New housing looking ahead in the Barrie area will be less about sprawling subdivisions and more about higher density lifestyle communities. The home you bought last year or plan to buy in the coming years is not going to loose value like the car you buy every few years. It will still be a solid investment that appreciates with time for Canadians. 
Posted by

 Mike Montague

  

Barrie Power of Sale Listings

Barrie home values

 

 
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