Demand for real estate in Prince Edward County, Ont., exploded in June as pandemic-weary Toronto residents seek an escape from the city.
The number of properties that traded hands doubled in June from May, says Treat Hull of the brokerage Treat Hull and Associates. Sales were also jumped sharply from June, 2019.
The average price, meanwhile, climbed 14 per cent from June of last year to hit $600,000.
Mr. Hull sees more than a burst of activity stemming from pent-up demand: he believes there is a tectonic shift underway in real estate that will likely result in high demand for Prince Edward County properties for a long time to come.
Mr. Hull says the coronavirus and the measures imposed to contain it seem to have prompted many people to think about a change in lifestyle. As restrictions were eased and the market began to open up again, buyers swarmed to Prince Edward County, which is about two hours east of Toronto.
“I think it’s psychological. The risk didn’t change overnight,” Mr. Hull says. “All of a sudden they just returned to the market. I was gobsmacked.”
Meanwhile, the number of resale listings fell far short of the same month last year. Months of inventory stood at just over four months at the end of June.
Months of inventory is an indicator of the balance of supply and demand. It measures how long the pool of current listings would last at the current rate of sales. The current level has not been seen since the bubbly days of 2016-2017.
Prince Edward County’s mix of farmland, beaches, charming towns and fine dining have made the headland jutting into Lake Ontario a popular weekend destination for visitors from Toronto for many years. Often, those visitors decide to buy a vacation home or an investment property they can rent out on Airbnb and other short-term rental platforms.
Some buyers also purchase with a longer-term view towards retirement. Mr. Hull says that is one group that has been making the drive along Highway 401 recently. Many are accelerating those plans.
Mr. Hull has heard from more than a few lawyers, for example. One is a senior partner at a large Toronto law firm who told Mr. Hull the changes brought about by the pandemic have given him time to reflect. He wants to slow down his practice and work mainly from home.
Mr. Hull says Zoom video conferencing and other technologies have made working from home acceptable now for a wide swath of the professional economy.
In the past, buyers looking toward retirement asked lots of questions about the proximity to a hospital and how long it would take to have the roads plowed of snow in the winter.
Not one of his buyers has raised those concerns in recent weeks.
“They want a retreat,” he says. “Distance from wineries matters for a lot of people.”
Another cohort of buyers is the family that has been talking about buying a cottage or vacation property for years. They’ve been cooped up for months – with lots of time to think about how nice it would be to have a retreat in the countryside.
“They’re stir-crazy and they can’t travel out-of-country.”
Some buyers are also motivated by fear of a second wave, he adds.
Mr. Hull’s analysis shows that many of the recent buyers and current house-hunters are new to the market – not only people who had to put their plans on hold in March when the real estate business dramatically slowed.
“It’s people who have newly resolved, ‘we’ve got to get a place in the country,‘” he says.
Many buyers feel a sense of urgency and want a shorter-than-usual closing, Mr. Hull says.
As for sellers, Mr. Hull sees no sign they are rushing to list. Many remain concerned about allowing agents to usher potential buyers into their homes.
Looking ahead to the fall, Mr. Hull says there has never been a higher level of uncertainty in the business world. Second waves are common in pandemics, he points out, and it’s also commonplace for the second wave to be worse than the first.
Those factors mean incomes could be hit hard and paying $300-a-night for a weekend get-away to the county could become a lower priority for many people.
Meanwhile, some forecasters are predicting a modest increase in real estate prices in Canada, while others are expecting a decline.
“My advice to clients is, you need to be ready for both scenarios,” Mr. Hull says. “It’s discomfiting for buyers. I’m not saying things are going to go south – but they definitely could.”
Toronto-Dominion Bank economist Rishi Sondhi is warning that the pandemic has thrown sand in the gears of Canadian population growth.
The national population count was already expanding at its slowest pace since 2015 in the first quarter, Mr. Sondhi points out. In April, immigration collapsed.
The risks from weaker population growth and elevated unemployment have prompted Mr. Sondhi to downgrade TD’s forecast to modest price growth in Canadian housing in the second half of 2020 and a mild decline next year.
He expects the impact to be most noticeable in the large cities of Toronto, Vancouver and Calgary, where many immigrants settle.
The rental market will slump first – at the same time that pandemic-related job losses have already disproportionately hit younger workers, who also tend to rent.
“The ownership housing market will also feel the impact as fewer newcomers purchase properties and there is less demand from investor-owned rental units,” Mr. Sondhi says in a research report.
Some of the setback is likely to be temporary, he says, but the mix of ongoing travel fears, a pandemic-related slowdown in processing times for immigration applications, government travel restrictions, an only gradually healing global economy to hold Canada’s population growth well below its pre-pandemic rate of about 1.5 per cent annually.
Your house is your most valuable asset. We have a weekly Real Estate newsletter to help you stay on top of news on the housing market, mortgages, the latest closings and more. Sign up today.