While January in Prince Edward County (“the County”) is quiet and for the most part caught in the clutches of a cold winter’s slumber, it also marks the beginning of a new year and a time to look back on the year that was. 2016 truly was a bumper year for the real estate scene in the County as well as Southern Ontario generally, with property sales showing no ill effects from earlier warnings about a sputtering economic recovery due to faltering oil prices, and broader concerns related to burgeoning average household debt loads. Rather equity markets rebounded significantly, interest rates remained low, and despite various measures by the banks and regulators to curb borrowing and tighten qualification requirements, demand for real estate in prime areas such as the County continued to intensify. Specifically with respect to the County, the region was regularly featured in the press and media of all kinds, and continued to receive attention for a wide range of reasons including travel, vacation and tourism, as well from food, wine and spirits enthusiasts, to say nothing of property investors. Indeed according to statistics made available by the Quinte & District Association of REALTORS® (“the Quinte Board”), interest in real estate in the County continues to increase at a remarkable pace while supply is simply insufficient to keep up with demand, resulting in extremely tight market conditions and frustrated buyers unable to secure the property they are looking for.
Despite the fact that the County real estate market put in in a strong performance in 2015, and was described in our year-end report at that time as being a tight market bolstered by strong demand and limited supply, 2016 was an even stronger year for real estate in the County. With all of the figures tallied for the year, the Quinte Board’s Enhanced Statistics Statistical Query Report supported by December’s figures reveal a compelling story of an extremely robust market that has built upon the performance of the year previous, and which based upon the pent up demand caused by ever tighter market conditions, appears to have real legs for the year to come.
December’s sales numbers came in marginally higher than last year with 36 properties reported sold as compared to 35 in December 2015, but bringing year end totals to 712 representing an extremely impressive increase of 20% over last year’s very respectable total of 591 properties sold. Where the story becomes even more interesting is that this surge in sales took place in a context of significantly reduced inventory where there was considerably less product to choose from. Despite the fact that December reported a rare year over year increase in new listings compared to 2015 figures, 61 compared to 40 for the same month the year previous, year–end Quinte Board statistics report new listings being down 12% year over year with a total of only 1252 new properties coming onto the market in 2016 compared to 1418 in 2015.
The combination of strong sales and limited supply contributes to the inevitable result of even more restricted inventory with the Quinte Board reporting only 210 active listings at the end of December across the entire County. This marks a 27% decrease in available properties over last year’s inventory when 286 properties were reported as active at year end.
Needless to say, with market conditions being as tight as they were in the County, it took much less time for properties to sell once they were listed. The average days on market for properties sold in December came in at 91 which was 38% faster than recorded in December 2015 when the average property took 147 days to sell. The figures for the entire year are consistent with December’s performance, confirming how much faster properties sold in 2016 compared to the year previous. Measured over twelve months, a property in the County took on average 78 days to sell in 2016 compared to 106 days in 2015. In other words, on average properties in the County sold 26% faster this year over last year.
Finally, strong demand and limited supply mean more people fighting over less product. This triggers fundamental economic principles resulting in the inevitable chain reaction of prices being pushed higher. And while properties in the County continue to represent excellent value when compared to comparable markets, the Quinte Board statistics in fact confirmed that properties have become more expensive with the average sale price for properties sold in December coming in at $426,344, marking a 24% increase over one year ago when the average price was reported as $343,977. When measured over a twelve-month period, however, taking into account a broader sampling of properties over an extended period of time, the average price increase is more moderate, with the average sale price for 2016 calculated by the Quinte Board as $325,751 compared to $304,075 in 2015 (a 7% increase).
As indicated, the outlook for the County real estate market for the upcoming year looks positive. The primary constraint on sales continues to be a shortage of supply, so unless more listings come onto the market these conditions are unlikely to change with demand for properties in the County remaining as strong as it is. Factors to monitor moving forward will be the impact of tightening borrowing requirements on buyers as well as potential for increasing interest rates, particularly given signals coming from south of the border. As indicated, however, affordability remains relatively good in the County, particularly when compared to comparable markets, therefore conditions would have to change fairly significantly to dampen the strong fundamentals which appear to support an optimistic outlook for the County real estate market for 2017.
Prepared by:Richard Stewart Vice President & Legal Counsel