It has a beautiful view of a forest framed by this picturesque window. It’s a touch over 2,000 square feet. Double car garage. Four bedrooms. Petite backyard (perhaps designed for millennials who don’t want to cut grass). Walking distance to parks and schools. Family friendly neighbourhood.
And… it costs a million bucks.
This house happens to be a brand new, builder inventory home in Markham’s Cornell neighbourhood, where practically every decent sized detached home is selling for over a million bucks… unless you’re buying one that only has a single car garage and is less than 2000 square feet.
I did a little bit of investigation this past weekend and a few of these inventory homes look to be remains of houses that didn’t sell during the 2017 peak-then-drop. The proof? I looked up the neighbours homes, saw what they sold for (and what time period) and realized that these were probably homes that were spoken for… and the buyers probably dropped out. Either they couldn’t close, or got spooked by the market… or just realized that a million bucks for a house like this isn’t worth it. (I’ll explore this in further detail in a later post so stay tuned.)
Are prices catching up?
Let’s go back and talk about the September 2019 market. Prices continued their modest increases, but this past month was a ‘higher’ level of modest, at a 5.8% increase over 2018 September’s average price. Price movement continues its year after year pattern, picking up in the fall and then eventually tapering off come November and December. Check out the stats here.
Sales are up (no surprise there) 22%. New listings are down a bit… by 1.9%. Active listings are done by quite a bit… by 14.1%. And homes are selling faster — 23 days versus 26 in September 2018.
Again — no surprises, and this past September was what I “predicted” it to be, only because it’s following the normal year-after-year pattern that we’ve seen for many decades (2016-2017 being the exception and break in the pattern).
If this predictable pattern continues, and prices continue to see modest growth, inventory levels continue to adjust to market conditions, and buyers and sellers remain confident in the market, we will see prices reach peak 2016/2017 levels (unless, of course, a crash or recession happens, or something worse…).
So if you’re thinking of entering a market where $300k condos five years ago are now selling four more than double… and where detached homes in Scarborough are hitting the $1 million price point again… and where brand new, not so gargantuan builder inventory homes in Cornell are also selling for a million bucks… should you be confident that you’ll get your money’s worth in the years to come?
As I always say, time will tell. Real estate prices reflect what’s going on in the local areas. Are more jobs being created, introducing ways for families to earn a living and pay for these houses? Is population continuing to grow? Is there a steady demand for houses, while supply is becoming more and more scarce?
Healthy, modest and consistent price growth is a good thing for the market, as long as buyers can afford their homes, and sellers get the price they need to make their move. This month, as Canadians go to the polls and elect the next government, we’ve got to be mindful about housing policies that will affect the real estate market. There’s a lot to consider, but to me all parties are putting out promises to entice voters rather than actually fix the housing issues of affordable prices, affordable rents and reliable supply in the marketplace.
We live in a great place — but the most interesting question (which I heard from a parent at my school) is a profound one — how will our kids be able to afford to buy the houses in our neighbourhoods?