In late June, a group of Ontario realtors began advertising the sale of a new pre-construction detached home project in Hillsdale, a community on the outskirts of Barrie. Not only would homebuyers who purchased through them be walking away with the deed to a soon-to-be-built home, but they would also drive away with a brand new Mercedes Benz.
In promotional videos filmed at a Mercedes dealership in Brampton, members of the realtor group touted a "free Mercedes Benz with every purchase" at the Barrie-area development. The realty team, called The Realty Bulls, also boasted long closings and flexible deposits on the homes.
Although members of the team did not respond to requests for comment, and it's unclear whether buyers would be given the Mercedes to keep or on some sort of a lease, it wasn't all that long ago that the very idea of offering any sort of buyer incentive in the Barrie area seemed wholly unnecessary. But the Barrie market, just like markets across Ontario, has softened since the February peak, evidently pushing some realtors to find more creative ways of attracting buyers.
Chantal Godard, co-founder and broker at Barrie-based Chantal + Michael Realty Group, says that she began noticing the Barrie-area softening near the beginning of March, stirring up memories of the market slow down in 2017.
"Everything sort of slowed down... but the crazy part was the number of listings that we had on our board were so low compared to how it was back in 2017 that there still was enough demand, and this is where it's been really interesting," Godard said.
Sales data from the Barrie & District Association of Realtors (BDAR) released on Tuesday revealed that June sales were down 41.8% annually, and were 30.9% below the five-year average and 34.8% below the 10-year average. Prices, although up 17.4% on a year-over-year basis, are down from the February peak. In June, the MLS Home Price Index benchmark price hit $906,300 -- a slight drop from February's $940,600.
BDAR President Luc Woolsey said that although the market has technically softened in recent months, it's important to remember that it's still up compared to previous years.
"It really depends on the perspective -- if it's a realtor looking at it or the public," Woolsey told STOREYS ahead of Tuesday's data release. "When we look at the market as it is right now, it's actually still relatively strong. It's a big difference from where it was for the last two years so it feels very soft, and the key takeaway for most people is they'll see this softening, if you will, and then panic. But really, we've not even softened to normal. We've just softened from really crazy to not that great."
During the peak, homes were flying off the market in a matter of days, often for well over asking. But now, they're sitting on the market for weeks, or in some cases, months. Although Godard says she has yet to see any other buyer incentives on the scale of a free Mercedes Benz being offered, she says that marketing strategies are shifting and offer conditions have very much returned.
"What we're seeing is that realtors were trying different strategies in April May to get offers on the property, so we're at the point now where really you should be pricing a home at what market value is and what they would be willing to take for an offer, because buyers aren't willing to pay $50,000, $100,000 over asking," Godard said. "We're seeing conditions coming back where it is okay to have home inspections. Even today in Barrie, there were 12 conditional listings and five of them were conditional on the sale of buyer's property."
Woolsey says he has also seen conditions making a return, estimating about 50% of sales now have inspection or financing conditions included.
"It's not that every home is getting 10 offers anymore, but if you've got a good property, there might still be multiple offers and you're still going to be sold in two or three weeks," Woolsey said. "There's not a lot of room for anything outside the norm as far as conditions go, but if we do start seeing things sit two or three months on market, that's where people start taking a lot more leaps."
The current conditions have proven difficult for both sellers and buyers to adjust to. For sellers, many are having trouble letting go of the fact they won't be able to snag as high of a price-point as they would have just a few months ago. And for buyers, although the rhetoric is that prices have dropped, housing hasn't exactly become affordable. And with concerns that prices may continue to drop, thus devaluing their investment, there's widespread trepidation.
"There's a lot of hesitation out there," Godard said. "What we're seeing in the conversations that we're having with a lot of clients is 'Is the market gonna continue to drop? When's the best time to buy?' Everybody always wants to buy at the bottom, but usually whenever you're at the bottom, you've missed it. It's starting to go back up."
Woolsey also point to increasing interest rates as a major factor for buyer hesitation. With three Bank of Canada hikes already implemented and a 0.75% raise expected to come on Wednesday, Canadians are seeing their mortgage payments increase significantly.
"Prices have come down a bit -- it might come down a touch more, but I don't think very much -- but the interest rates are going to go up more, and that's going to continue to make that affordability gap unfortunately bigger," Woolsey said, "So if anyone's sitting waiting for prices come down, it's actually only going to get more expensive. If you can lock in a rate today, if you can get that process going, you'll be better off than you would be if you waited."
