For many years, the Niagara real estate market was straight-forward. Sure, we had buyers coming in from out-of-town, but for the most part, a lot of the activity and demand was coming from within the region. If you look at the data from 2002-2015, you’ll largely see a market that was consistent, and dare I say, boring.
With the average sale price increasing 2 or 3% per year, and total sales bouncing around the same range, there weren’t many sudden moves in any direction. With such few ingredients in the soup, it was comfortable and predictable but wasn’t stealing many headlines.
The Shift
As we got into 2016, suddenly there were more and more slices getting added to the Niagara real estate pie chart. Buyers were now arriving from places like Georgetown, Oshawa, Orangeville, and various points around the GTA.
Suddenly, buyer demand and competition looked and felt completely different. The local Niagara buyer was suddenly faced with competing against a much more brazen and confident out-of-town buyer.
The pie chart of buyers now had many more slices, which directly impacted the landscape across the board.
Prices started to jump up like we had never seen, while annual sales volume ratcheted up as well. As a result, the average time it took to sell a home dropped, and the market took on more of a frenetic pace.
After a decade or more of ho-hum, rinse, wash and repeat markets, we suddenly had many more ingredients in our real estate soup. And those ingredients brought with them different levels of motivation, confidence, and financial strength.
A New Bar Was Set
With these new puzzle pieces added to the mix, expectations of normal changed. Afterall, now that these gun-slingin’ GTA people are riding into town with their bags of money, prices, activity, and overall market conditions have found their new normal. Right?
This is the plot twist. Now that the Niagara market has been reset to this new level of activity and pricing, what happens when those brazen buyers retreat to the sidelines?
If the pie chart was transformed due to the influx of new demand, what does the pie chart look like when they press pause, if only temporarily? If the pie chart is now largely comprised of local demand, much like pre-2015, what appetite is there amongst the locals for this new way of buying and selling real estate.
Are they willing to keep the real estate engine chugging, or will the pie chart reset to far fewer slices in the mix? Looking at small scale anecdotal evidence, coupled with the larger scale GTA real estate market data, a big driver, or lack thereof, of the current sluggish Niagara market is the lack of out-of-town demand.
Without the spice that those out-of-towners bring, the overall market has lost that zip. Houses take longer to sell, with buyers being extra cautious. Offers are signed back multiple times before a deal is reached, if at all. It's different, and fairly unpredictable.
The Opposite of Brazen
Whatever the opposite of brazen is, is where we currently sit.
For the market to start picking up speed, we will need to see the return of those missing slices of the pie chart. The buyers from Vaughn, Woodbridge, and Barrie. They have sold their home for “x” and are looking to buy in Niagara for “x” minus 30 or 40%.
Now that our local prices have flattened out over the past three years, a key ingredient of the market to watch out for is when the Toronto market starts firing back up. With that market leaching out into the surrounding 200km radius, the pie-chart starts to add slices, and market fluidity will start to return. When that happens is the big question of the day.
If there is one thing we’ve learned over the last few years is that the much maligned out-of-towner is actually the slice of the pie that our market needs to maintain this new normal.
Stay tuned.