On the market

Resales up, new homes continue prolonged slide

Spring has, at last, arrived. As daffodils and tulips bloom under a warming sun, real estate for-sale signs are also sprouting vigorously across the County. But what kind of market will this crop of offerings find?

Across Canada these are uncertain times to buy or sell a home. News reports in major cities indicate sharp declines in sales and prices. Mortgage rules are tightening. But rates remain low. Cranes erecting condominiums across Toronto’s skyline are suddenly still.

What about Prince Edward County? Are the same forces at work here? How is the County real estate market faring compared with these larger markets?

For the past half year Treat Hull of real estate brokerage firm Hartford and Stein has been gathering, collating, and analyzing data specifically for County real estate markets. It is the first time this depth and breadth of information has been assembled and made available charting the distinct characteristics and trends in this market.

The good news is that over the past six months, sales and home prices in the County are up over the same period a year earlier—bucking the trend in larger markets. The worrying bit is that there are fewer new listings coming onto the market. So, more buyers are chasing fewer homes.

Some of Hull’s early findings are shattering traditional notions of when to sell your property.

Many home sellers, typically, choose to wait until the residue of winter is swept away to list their home—knowing that their property shows better when the lawn is green and the trees leafy.

But Hull’s research suggests sellers who waited until spring to list their homes in the first three months of the year missed out on a fairly buoyant market— one in which the advantage was clearly tilting toward sellers.

Hull reports that unit sales of detached homes was up 9.6 per cent in the first three months of this year compared with the same period in 2012. He also found that prices were marginally higher this year over last.

Meanwhile he found homes were selling more quickly with nearly half, 47 per cent, of newly listed homes selling within 90 days. Last year over the same period, more than 75 per cent of newly listed homes were still unsold 90 days after they were put on the market.

The key driver, according to his analysis, is that inventory of detached homes is falling—that is, fewer homes are being put up for sale.

If the trend continues, it is a good signal for sellers in 2013. New listings were off 9.4 per cent in 2013 compared with last year. Hull speculates that sellers may have been discouraged by the headlines from major markets, causing them to reconsider listing their home.

He forecasts a solid market for home resales in 2013 according to his data.

BUILDING SLUMP WORSENS
New home building in Prince Edward County, however, tells a starkly different story. According to numbers released by the municipality, the County is on track to build just 60 new homes in 2013—the lowest levels since Countywide records have been kept.

A decade ago the County saw 125 to 150 homes built each year but since 2008, the number of new home starts has declined steadily. Capital markets seized up that year, financing dried up and the North American housing markets fell into recession.

Compounding the crisis, the County decided that year to levy steep new development and connection charges upon builders. When financing became available again and the market began to rebound, homebuilders chose the lower fees available in Quinte West and Belleville. They largely gave the County a pass.

Seven years into the slump, local builders and trades are eager to see signs of a turnaround. County council responded, in March of this year, by offering a 50 per cent discount on development charges to lure builders back.

Hull wouldn’t speculate on whether the decline in sales of news homes was acting to buoy up resale homes.

Instead he pointed to pervasive demographic trends that he predicts will continue to make Prince Edward County an attractive retirement or relocation destination for those looking for a change of pace from Toronto, Montreal or Ottawa.

“So far we have just seen the thin edge of the wedge of baby boomers reaching 65,” said Hull. “They should continue to be a force in this market for another 12 years.”