I enjoy spending my 10-11 days between December 24th and January 3rd playing board games with my family, skating, skiing, binging on shows I haven’t had time to watch and yes…filling my face with delicious home cooked meals. But this year I was surprised at how many texts, emails and DM’s I received wishing me Merry Christmas followed by… “So A.J., what do you think the market is going to look like in 2021?”. I decided to put my thoughts to paper and shoot from the hip with a few predictions for 2021.
I’ve always said that the Real Estate Business is one of the few industries where common sense usually prevails. Just because someone overpays for a home, does not mean they are crazy. It simply means they want or need a home, they qualify for a mortgage, so they buy. Where the crazy lies are not with the buyer or seller, it is with the process getting there. When inventory is low, interest rates are low, people’s definition of “the workplace” means stay home and kids learn from an iPad, then crazy occurs.
I strongly believe that the first half of 2021 will continue to be the same. I don’t expect to see any changes in interest rates or home value increases. We will also see the same number of people, or more, looking for homes. With this continued phenomena of low inventory, it’s almost impossible to just flip a switch and go back to a “normal” market.
Many of the theories out there include:
- COVID 19 lasting into 2022
- Toronto buyers moving east
- More people continuing to work from home
- Home schooling becoming normal
- Stagnant immigration due to COVID
- People looking for bigger home office space
- Aging population living longer
- Kids don’t trust retirement homes for parents
And the list goes on…
The second half of 2021 will see a shift in markets and a slight evening off in values. The shift has already started. Outlying areas that were considered too far are now becoming very attractive. This shift takes the big city buyer and turns them into a small city or country buyer. We’ve seen this in places like Cornwall, Napanee, Westport, Pembroke, Peterborough, Belleville, Carleton Place, Hawkesbury, Kemptville, Limoges, Lindsay, Embrun etc. Now don’t start getting mad at me for calling Cornwall or Napanee the country, but these towns and cities saw multiple offers and the crazy markets a little later than the Ottawa and Toronto markets did. If you look at a map and start with the densest populations and move outwards to the less populated areas, you will understand what I mean. 2 years ago, I could have bought waterfront outside of Ottawa for less than $350,000. Today, it’s almost impossible. As buyers begin to realize that a 45-minute country drive is more fun than a 45-minute drive in rush hour or can work a few days a week from home forever, these areas become very interesting.
Now that still doesn’t fully answer the question about the market in Eastern Ontario for 2021. There will be a moment in time this year where townhomes and smaller houses reach a price point where the threshold for pain is too much for the buyer. I call this the high tech stock factor. It’s that point when you want to buy a stock but you say to yourself…” I just can’t do it and I don’t care if I miss the boat”. The first indicator will be what we call “Days on Market”. This is when homes actually stay on the market longer than a week. The first type of homes to be affected will be townhome condos, then townhomes then homes on very small lots with little to no parking. Condos in towers will start selling off the shelf and the rental market will begin to become super competitive again.
All this being said, I do not expect the market to drop and go into negative digits. Things will level off and home prices will go back single digit increases by 2022. So if you are in the market for buying a home and can’t seem to keep up with the multiple offers or price increases, start looking outside of downtown or simply be prepared to pay more than you were expecting. And for those that think the market in Eastern Ontario will tank, it won’t.
EXIT Realty Eastern Ontario