Has The Local Real Estate Market Cooled Off?

It's hard to tell from the unseasonably warm weather, but we are a couple weeks into the fall season. The autumn real estate market is well under way and even if the weather hasn’t cooled off yet, our local real estate market (Windsor, Ontario) is certainly feeling a drop in temperature. Today we are going to discuss a few of the factors that have led to this cooling.

Sellers Have Adjusted Their Prices Upwards

This makes a lot of sense. We had a pretty crazy first 8 months of the year. Multiple offers were everywhere, properties were selling considerably over list price and it was a great time to be a seller.  As this continued, the market adjusted and realtors and sellers began to adjust their prices to these new comps. As prices increased, demand levelled out to a more balanced market place.

Interest Rates Were Raised A Couple Times

The Bank of Canada (BOC) has now increased the benchmark interest rate two times this year, for a total of 50 bps (0.5%). Although this is a minor increase, it has affected affordability and how much house a buyer can qualify for.  The BOC seems to be indicating that they are also planning further hikes into 2018. This has led to a modest softening in demand.

Trickle Down From The Toronto Market

After a series of measures introduced earlier this year to slow the housing market, the government seems to be finally succeeding. Sales are way down, prices are stalling and deals signed in the spring are running into snags at closing. A large segment of the demand in our market was coming from Toronto buyers who were relocating and/or investing in our market. Suddenly, properties that used to sell in a few days are sitting on the market for a couple months. Because of these developments, this pool of buyers has seemed to slow and put a dent in demand.

General Uncertainty

There seems to be lots of bad headlines out there right now: the Liberals are planning to change the taxation of professional corporations; anything Trump related; the US, Canada & Mexico are renegotiating NAFTA; North Korea’s nuclear program; hurricanes causing havoc; flooding (which we experienced locally); and terrorist attacks. Uncertainty is never good for markets. Markets operate on confidence, which is sometimes a fragile thing. It's difficult to quantify how much confidence is shaken by these types of events, but combined with the above factors, it probably has some impact on demand.

Sometimes it's hard to figure out cause and effect in markets but those are some of the factors we see cooling our local market. What are your thoughts on this subject? We’d love to hear from you.

2017 Real Estate Trends: Trump

Did you hear the US has a new president?  Unless you’ve been living under a rock, you’ve no doubt heard about incoming president Donald Trump.  The unlikely victory by the polarizing figure has sparked protests across the US and the world.  No doubt, this a volatile time.  Regardless about how you feel about him and his term as president, there is change coming.  Today, we are going to discuss how some of that change could affect our real estate market.

Disgruntled US Citizens Moving North Of The Border

During the campaign season, you heard over and over from non-republican voters that they would consider moving to Canada if Trump became president.  Although this sounds great, I don’t think we will see a material population of Americans trying to move to Canada.  There are too many logistical issues such as immigration, etc that would prevent it.  Overall we don’t expect to see much impact from this.

Immigrants Choosing Canada Over The US

As two countries with lots to offer immigrants, Canada and the US sometimes battle over the most skilled applicants.  With Trump being viewed unfavourably by much of the world, these cream of the crop immigrants may choose Canada over the US.  This could be good for growth in Canada and therefore our real estate market.

Focusing On The Economy & Jobs

The emphasis on much of the policy Trump is expected to be putting forward centres around jobs and the economy.  He doesn’t really mind if he ruffles feathers in the process of gaining or keeping jobs in the US.  We’ve already seen announcements from different manufacturers about moving jobs back to the US or deciding the keep them there instead of moving to a lower cost jurisdiction.  Most of this rhetoric is aimed at low cost producing countries such as Mexico or China.  Canada is a higher cost producer and has a pretty balanced trade relationship with the US.  Therefore we do not see Canada as a trade target of the Trump Administration.  If we see a resurgence in manufacturing in the US, that could benefit our economy by proximity and inter-country companies building components in both countries, making it mutually beneficial.  As a border town, this could benefit our local manufacturing sector and therefore our real estate market.

General Uncertainty

Markets and companies don’t like uncertainty, which without a doubt, the incoming Trump administration has brought about.  People like to invest in stable economies.  During this period with Trump, Canada could look very attractive as a place to invest for companies and real estate investors.  Our real estate market could benefit from this perceived relative stability.

The times they are a-changing.  Those are some of the takeaways we see from the changing landscape under Trump.  What are your thoughts?