Pandemic lifestyle changes affect real estate market

There is no doubt the Niagara housing market is hot, and even more so in Niagara-on-the-Lake.

How hot is it? Very, say local real estate agents, indicating 2020, expected to be a difficult year during a pandemic, turned out to be a spectacular year for selling houses.

And 2021 is looking even better, as a growing number of potential buyers, many from the GTA, want to move out of crowded urban areas to the small-town environment and slower lifestyle Niagara-on-the-Lake has to offer.

The local market could get even hotter, if possible, thanks to a recent online report listing NOTL as one of the best places in Canada for those wanting to escape a busy urban environment. One in five homebuyers, it says have moved or plan to move from a major city hub to a small town/rural area.

The reasons vary, from those close to retirement considering making a move, pushed by the pandemic to accelerate their schedule, to those looking for a safer, smaller community to raise a family.

To assess why real estate sales have taken off during a time when it was predicted there would be a slump, The Local talked to several sales representatives with their fingers on the pulse of the local market.

Kim Schwenker of McGarr Realty says looking back to the November and December of 2019, and January 2020, before the pandemic hit, sales were “significantly under” the average year  for the same time period.

In the last 90-plus days of 2020 and early 2021, new listings were down about 25 per cent over the same time period of the year before, but the number of sales was up 88 per cent, the average sale price was up almost 19 per cent, and the average number of days it took to sell a house was considerably less, says Schwenker.

Low inventory of houses for sale has been driving up prices, and also reducing the length of time a house is on the market, she says. “Prices are going crazy” across the region, she explains, although the percentage increase isn’t as high in NOTL as in other municipalities, simply because the prices are so high to begin with.

Sales people have been dealing with multiple offers in the $1.5 million and up range recently, “something that Niagara hasn’t seen much, if at all, in the past.”

Schwenker says in the past four months she has been involved in four situations with houses in the $1.65 million price range receiving multiple offers, an unusual situation for real estate priced that high.

The fact that more houses are going for more than $1 million in the region is important for NOTL, she adds. “It tells us more people who are coming to Niagara can buy houses in that price range,” she explains, when in the past, the number of people who could spend $1 to $2 million on a house was limited. “Now we’re seeing more of them, and a huge number of sales in a shorter amount of time. The high-end sales are becoming more common, and that is really significant. It will make a change in the face of the region.”

However, she sees this March showing something a little different, with more houses coming on the market. “If the pace for new listings continues this month, we will have a record number of new listings over any March for the last 10 years. We will see what effect this has on sales and prices as the month moves forward, but this may bring a bit of a relief,” she says, “a glimmer of hope” for buyers.

Spring is typically when more houses go up for sale, as people begin to move outdoors, after hunkering down during a long winter. They also start to think about a new house to enjoy the summer, and moving before kids go back to school.

Having more inventory will also make it easier for agents, who have been finding it difficult to adjust to the new pricing. “It’s hard to keep up with pricing in a hot market,” she says, “when the only real determining factor is how much it sells for.”

Despite having the lowest number of listings in a long time, and a pandemic, “2020 turned out to be a great year. The real estate market is totally dependant on human behaviour, and this hot market was unpredictable, based on the number of people deciding to get out of Toronto, finding the city was congested and discovering they could work just as easily from home.”

They saw it as an opportunity to get out of town, decrease their mortgage, and change their lifestyle, says Schwenker.

“This pandemic is changing how we look at our lives. We’ve been running ourselves ragged, and the ability to work from home has made us realize we can change the way we live. We can live, work and play in the same place in Niagara. We’ve all had a shift of priorities, an awakening during these lockdowns. Our lives are changing, and that change is not going to go away. Nobody wants to be watching life pass us by on the highway. What’s happening is the universe forcing humans to smarten up and realize what is possible,” says Schwenker.

“The newcomers to Niagara are excited about their new lives, their new relationships. They want to engage with other people, and enjoy the new life they’re committing to. They want to be part of a community.”

Andrew Perrie of Revel Realty plans to open his own real estate office in NOTL April 1, with partners Jessie and Evan MacDonald, on Four Mile Creek Road. He is seeing the boom in sales across the region, and says many of his clients thinking about moving from the GTA have decided on Niagara, but not necessarily NOTL. He asks them what they’re looking for in a lifestyle, and although they don’t always know it when they come to Niagara, what they describe is better suited to the small town, rather than Niagara Falls or St. Catharines. Many are people who have decided to retire a little sooner than planned, due to COVID, and others are young couples living in a condo and wanting to start a family, he says. They like the fact that there are good public schools, and they’re not even thinking about a high school at this point — they’re just looking for a safe neighbourhood to raise their family.

NOTL is always a hot spot, he says, because of the lifestyle it offers. People come here, maybe having heard about it from friends or family, “they check it out, experience it, and want to live it.”

It helps if they have a local realtor, who can give them advice on the best place to live to find the lifestyle they’re looking for, he added. Some of them have already decided, but “a lot don’t know about it. I can explain it, and show it to them.”

During the pandemic, he says, it’s important to have a realtor who knows the community, who lives and works in NOTL. “You have to be able to explain the community, without being able to show them the lifestyle.”

Toronto clients may see their money going a lot further in Niagara. However, with more houses in the $1 million price range or higher, they may also see themselves staying in Toronto — until they experience the different lifestyle Niagara has to offer, especially if they plan to work from home, or are retiring, and they find an area with “a little more breathing space,” says Perrie.

Locals who are selling may have lost a spouse, and are alone, or are downsizing as a couple. They might not have planned to sell right away, or during a pandemic, but they see what houses are going for and decide to maximize the sale price, he says.

And he doesn’t see that changing any time soon.

“I don’t see the bubble bursting,” says Perrie. “It might cool for a few months, as we see more listings on the market slowing competition, but I don’t think we’ll see it going down, especially not in NOTL. This town has so much to offer.”

One year ago this week, for many families and businesses, the world came to a screeching halt, says Doug Rempel of Bosley Real Estate Ltd.

“We were asked to learn new social disciplines and accept that things were going to be different, although just how different we had no way of knowing.”

Real estate was privileged to be deemed an essential service, he says, “and as we moved farther away from the March 10 pandemic declaration, the pace of business increased dramatically. In its year-end review, the Niagara Association of Realtors reported that Niagara region saw an increase in the number of sales, a decrease in the number of listings, a decrease in the average number of days it took for a property to sell, and a 14.8 per cent increase in the average selling price.” 

By comparison, in Niagara-on-the-Lake, says Rempel, “there was an almost staggering 53.3 per cent increase in the number of sales, a 2.2 per cent decrease in the number of listings, an 8.7 per cent reduction of the number of days it took for a home to sell, and a 10 per cent increase in the average selling price, to $808,700. The strength of last year’s market has carried over to the start of 2021. Niagara-on-the-Lake’s February statistics report 46 new listings, 49 sales, and an average selling price of $967,300.”

Certainly one of the COVID lessons is that we don’t have to live within a short commute of the office, says Rempel. “In-home offices and schooling are redefining lifestyles. There is a new-found freedom, which has opened new horizons for residents in the 416 and 905 halo, and the resulting increase in demand, combined with a chronic shortage of housing options, has caused prices to rise month after month.” 

Like all businesses, realtors have adapted to the COVID protocols, he says. Access to offices and client visits have been restricted, contact tracing and health disclosures implemented, public open houses cancelled and in-person showings curtailed. Best practices required the use of personal protection equipment for realtors and their clients, and limited access to homes, with before and after-viewing sanitizing. 

Today, says Rempel, more than 95 per cent of home buyers start their search electronically. Online searches need to include a robust photo gallery, floor plans, and three-dimensional imaging; virtual tours, video or Facetime presentations are common; property and community information needs to be more comprehensive, “and where would we be without Zoom?”

E-communication and electronic signatures enable remote negotiations, he explains, the completion of contracts, and even the transfer of funds.

“COVID has not introduced these tools and business practices, but has accelerated their implementation, and they are continuing to evolve and are becoming more sophisticated.” 

For most, the sale or purchase of the family home involves their single largest asset, and it is one of the top-three emotional and stressful dynamics, says Rempel.

“As realtors, it is our privilege to be facilitators. We get to know our clients and their needs and wants; so much of what we do relies on building a strong, understanding, and empathetic relationship, which can be very challenging without a one-on-one, face-to-face interaction. While technology can provide a significant amount of information, neighbourhood and property visits with our clients is a critical part of the selling and buying process. We miss the interaction, and are impatiently waiting for the day, hopefully not too far in the distance, when we can return to the new norms.” 

Doug Widdicombe of Sotheby’s International Realty points to the pandemic as the cause behind the lack of the housing inventory for sale, the driving factor of today’s market.

Typically there would be about 200 listings across Niagara-on-the-Lake. Right now, the number is in the 60s, he says, including some mobile homes in St. Davids and on Mewburn Road, and two homes priced at more than $5 million.

The shortage of houses for sale, especially those priced under $1 million, “is scary,” he says. 

The good news is the spring market is beginning across the Niagara Region, with  multiple offers, houses selling quickly, and at high prices that are being supported by banks, accepting the prices as the “new norm.”

Those who are willing to sell during a pandemic are excited to see the money they will get, but they have to be careful.

“It can be tricky. A lot of people are afraid to put their home on the market, afraid they won’t have anywhere to go. They are still dealing with the same small number of listings.”

Widdicombe jokes about the phone calls home owners receive from time to time, from realtors asking if they want to sell. “They say, ‘I’ve got someone interested in your home.’ Now when they say it, it’s real.”

He says he’s hoping the spring market and more inventory coming up will take some of the pressure off the rising prices, making it easier for everyone. “I’m really hoping it will calm down a bit.”

But with the number of people in Toronto wanting to get out, especially those in condos living 20 to 30 storeys up who have to line up to wait for elevators, with only two people allowed in them at a time, the market will continue to be strong. “They’ve had enough of waiting. They want to move out,” says Widdicombe.

In real estate, there is a time for buying and a time for selling, and realtors talk a lot about what advice to give about the future, Widdicombe says. His personal opinion at this point on pricing is  “fifty-fifty. They could move up or down.”

What is surprising him, with the number of houses priced in the millions getting multiple offers, “is the amount of money out there.”

Ryan Johnstone of Royal LePage says the local real estate market is thriving, and continues to be a sellers’ market. “If we go back to February 2020, we had a balanced, gradually improving market with seven months of inventory, $765,000 average sale price, and eight properties which sold over $1 million in January and February,” he says.

“The pandemic hits, we go into lockdown, and for the most part, everyone’s lifestyle, and day-to-day work routine, changes. As we recovered  from the first lockdown, we quickly realized that people started making changes in terms of housing. The exodus from urban to rural areas started.”

Fast forward to February 2021, says Johnstone, “and here in NOTL much has changed over the past year. We have 1.6 months of inventory, average sale price year-to-date is $1,148,000, and 33  homes at $1 million-plus have sold already this year. Local sellers are now capitalizing on this strong appreciation in the market, and might consider downsizing, but may find it difficult to find a house with the limited inventory across the region.”

Last year was historic for everyone, says Nancy Bailey of Engel & Volkers. “It has been a time to expect the unexpected, and to learn and adapt to new and ever-changing needs of our clients. The housing market has entered 2021 blazing hot, with the off-the-charts demand, and an extreme shortage of homes for sales. Home sales and prices are expected to keep rising in 2021 as coronavirus vaccines become available. Inventory will continue to rule.”

Several economists are predicting a storm year for home sales in 2021, says Bailey, even stronger than 2020.

Clients are looking for lifestyle, not just a home, she adds. “Location … location … location …  lifestyle.”

Adapting to the consumer means it’s time to add a fourth “L” to the guiding real estate fundamental as a reminder to invoke the lifestyle elements a home possesses, she says. 

“For example, potential homeowners can imagine themselves exploring European cooking classes in the open kitchen plan, stargazing with their children in the outdoor living room, hitting the bike trails after work, or strolling the downtown galleries. NOTL offers all of this and more.”

In this environment, pricing a home to be “in the market,” and not just “on the market,” is critical, she says. Statistics show that if the house is overpriced, the buyer will net less money,  and it will expose them during the pandemic to people coming through their homes but won’t purchase them.

Also, the pandemic has encouraged realtors to improve their qualifying skills to avoid putting themselves and others at risk by showing homes to people who are not financially in a position to make a purchase, says Bailey.

Tom Elltoft of Niagara-on-the-Lake Realty says he believes the pandemic “accelerated” something that would have happened eventually. He’s seeing clients who, thanks to the proliferation of telecommunications, are working from home, and others who were taking their time thinking about retiring now moving up their schedule.

He’s finding younger couples with a family wanting to move from the GTA, and older couples, grandparents, looking for homes with multiple bedrooms and bathrooms, a pool and a big backyard to create “a safe haven” for their families to visit.

As well as seeing rising prices, he says, houses in the high end of the market that might have sat for a year are now moving quickly.

Although bidding with a fixed date to look at offers is popular in some places during hot markets, it’s not seen that often in NOTL he says — certainly not like Toronto.

When people have driven an hour or so — and 90 per cent of his clients are from Toronto — they want to see multiple listings, and real estate agents fear they will miss the buyer that may make the trip the next weekend.

The locals who decide to sell are people who would have sold anyway, although in the current market, some are nervous. They may be afraid to move during a pandemic, fearing they won’t be able to get a moving company — “you absolutely can,” says Elltoft — or they might be anxious that with houses selling so quickly, they won’t be able to find what they’re looking for.

“I would love to have another 20 listings,” he says. “Usually we average about 50 to 60 listings. Now we’re down to 10, and they sell quickly, so we don’t get to build up an inventory.”

In many ways it has become easier to see a house during the pandemic, because people spend more time online, where the virtual tours are more extensive. 

“People are doing their homework before they get here,” he says. “They might have already decided where they want to be.” 

Whether they have decided on the Old Town or one of the other communities, “we very rarely go back and forth,” he says. “And it is easier if they work with a local realtor who knows the areas.”

Buyers are also coming to town pre-qualified, he says, so sales happen quickly.

“A lot of times, people from Toronto discuss things in the driveway of a house or a parking lot, and make up their minds,” he says.

The market for rentals is also high, with people looking for an extended vacation, says Elltoft.

“We’re the furthest south without being able to cross the border,” he says, “and there’s space to walk around and feel safe.”

It’s not just the buyers who are changing their lifestyle, choosing to work from home, says Elltoft.

The NOTL Realty office has been closed since March 2020, “and yet this has been the best year in real estate yet,” with staff working safely from home. “We don’t need to work in the office,” he says.