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'Bottom of the price barrel': Home prices starting to rebound

'My feeling is that it’s actually started to go back up again in January,' says head of region's real estate association
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Simcoe County experienced an overall average decrease of 7.9 per cent in home prices in 2022, but figures show prices have started to nudge higher month over month.

The average price in Orillia was $623,308 — a decrease of 15.8 percent compared to the previous year.

In Innisfil, which has a vast range of home styles — from multi-million-dollar mansions to small cottages — the drop was dramatic, down 36.4 per cent to $712,938 in December 2022, compared to December 2021, according to recent figures released by the Barrie & District Association of Realtors.

In Barrie, which accounts for roughly 25 per cent of residential real estate sales in Simcoe County, the average price dropped 17.1 per cent to $708,000 in December.

Collingwood experienced a drop of 8.9 per cent to $872,054.

Midland was $480,833 in December, down 10.9 per cent, while Wasaga Beach fell 18.8 per cent to $661,688. 

Meanwhile, Essa Township saw a 30.2 per cent increase to average values of $1,042,917 last December, while Oro-Medonte Township was down 19.6 per cent to $860,893. Springwater Township’s average prices fell 18.4 per cent to $1,116,167.

The market started strong in 2022 with prices peaking in February, said Luc Woolsey, president of the Barrie & District Association of Realtors, describing the rise from December 2021 to February 2022 as "meteoric." But that was followed by declines of about 30 per cent since that peak.

“When you look at year-over-year, December to December, (the decline in prices) is not nearly as stark,” he observed.

Woolsey suggested the big swing in Innisfil could be an anomaly caused by its diverse property types and large range of neighbourhoods. In December 2021, for instance, prices in Innisfil ranged from $255,000 to $2.75 million — with 16 sales above $1 million.

In December 2022, the range was $255,000 to $1.26 million and there were only three sales above $1 million.

Woolsey points to December 2021 when the average sale price was 59.9 per cent higher than December 2020. That increase, he suggested, was offset by last year’s decrease of 36.4 per cent, resulting in an overall positive position over those two years.

Meanwhile, the month-over-month figures from last November to December saw an overall increase of 6.8 per cent in Simcoe County with a slight increase of 0.7 per cent in Barrie and 1.6 per cent in Collingwood.

Innisfil, Midland and Wasaga Beach saw drops of 12.8, 19.6 and 9.1 per cent, respectively.

Orillia saw a jump of 14.2 per cent and there was an increase last month of 38.3 per cent in Essa Township.

Woolsey believes the downward trend is over and expects the market to continue to rebound as available inventories remain low.

“Definitely, the numbers in the latter part of the year were showing a slowing in the amount it is dropping,” he said. “My feeling is that it’s actually started to go back up again in January.”

He expects higher interest rates introduced over the past year are likely to continue, and buyers are becoming used to that reality.

A housing supply of four months is considered a balanced market and anything above that gives the advantage to the buyer. Last year, the supply dipped to a half a month, then climbed, closing in on four months. But it has since dropped to about two months of inventory.

Interest rates may not yet have seen their peak and will likely result in some short-term pauses in real estate sales, said Woolsey. But the housing shortage persists. With the area’s ongoing population growth, he expects there will continue to be competition in the market.

“I think people are going to come to the realization that this is near or at the bottom of the price barrel and they’re going to start jumping back in and fighting over homes again,” he said. “There’s just not enough inventory to ever have a buyers’ market.”

In a report released last week, Royal Bank of Canada economist Robert Hogue concluded that the country’s housing market is inching closer to a cyclical bottom, describing 2022 as a year of extremes. Higher interest rates are expected to limit increases, but strong population growth will eventually heat things up.