By Shawn Lackie
The housing industry seems to be going through a massive slowdown these days, the likes of which we haven’t seen since the early 90s. There are many contributing factors to the slowdown, of course. Inflation, crazy house prices, increased interest rates and the old supply and demand routine.
Since 1997, when things started to pick up again, the sales and price increases have pretty much been on the rise every year. This, barring the brief exception in 2008/09 when things went downhill in the United States of America. Canada wasn’t as affected by that downturn, due to the stringent disciplines of our banking system. So the market picked right up where it left off in 2010, leading to some pretty crazy bidding wars and price increases in 2016/17. Then the market just flat-lined. Buyer fatigue and prices were the main cause. Then Covid hit and changed everything, in a massive way. People panicked.
The need to escape the confines of Toronto was first and foremost. Companies were forced to let employees work from home. This was something seldom considered before, unless you were independently employed; like a writer, artist or Real Estate agent. That move caused huge price increases and bidding wars, in places which weren’t used to that kind of furor.
Northumberland County, The Kawarthas, parts of North Durham and others saw the average house price skyrocket, from 2019 until early 2023, becoming pretty much the status quo. Builders were ramping up, by building more condos than anyone could ever have imagined. Now, we are faced with a new dilemma.
Businesses are now demanding these same workers return to the office. So if you bought a house in Seagrave and were enjoying the luxury of working from your home den, you may now be forced to consider the daily commute to Toronto. Either way you look at it, this just isn’t going to end well. People who bought out this way certainly can’t afford to go back and buy in the city.
The commute may be onerous and expensive. As a result, many may be forced to retire or look for employment locally. Many already have. The mass of condos in downtown Toronto are now sitting empty, and the slowdown in sales in the city is the largest in years.
Potential solution: Maybe a balance can be struck. You can work from home two of the five days. This could also ease the perpetual traffic tie-ups in the city. Some compromise has to be made.
Present consequences: There will end up being fewer investors, who only helped to drive prices up in the midst of the pandemic. Rents will also have to drop to become more affordable. In the outlying areas, where prices went nuts, there will possibly be some moderation there, as well.
Interestingly, it used to be the further out you went from Toronto, the less you would pay. Again, the pandemic changed all of that, and not for the better.
In the meantime, those same builders holding the condos in T.O., are now going to have to consider re-pricing them, to make them more attractive to buyers. In the long run, that can only be a good thing for the consumer.
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