Sustainable Development Goal (SDG) 11.1: Ensure access for all to adequate, safe and affordable housing.
House prices
While home prices have generally reliably risen for nearly 20 years, there has been a sudden spike in rural home prices during the Covid-19 pandemic. Eastern Ontario regions averaged 32.4% in median home price increases from 2020-2021. While Toronto averaged ~18%, Northumberland County was 44%, City of Kawartha Lakes was 60%, and Prince Edward County averaged 79%. (CREA)
PEC median after-tax household income increased by only 36% from 2010 to 2020, while median house sales prices increased by 135% in the same timeframe.
Factors that are affecting housing prices and inventory
Second-home sales are likely responsible for most of the increase in house prices and rents since the start of the pandemic. Prince Edward County’s housing market has felt the impact of increased homeowner demand with people from areas surrounding Toronto purchasing local properties where they can work remotely and live more affordably. Roughly 75,000 people left Toronto and Montreal – Canada’s two biggest cities and main COVID-19 hot spots – for other parts of their respective provinces of Ontario and Quebec in the year up to July 2020, the largest such migration since at least 2001. (Reuters.com Red-hot and rural: Canadian towns grapple with big-city-like real estate boom, May 13, 2021)
For Prince Edward County, the in-migration from large urban areas helped drive house prices up 78.5% (April 2020 to April 2021), putting ownership out of reach for many local residents, especially first-time home buyers. This is creating a large divide between those that owned a house 5-10 years ago and those that didn’t. A good job isn’t enough anymore to promise home ownership.
Low borrowing costs intended to stimulate the locked-down economy, also increased property buyers’ budgets. As many invested in real estate, the most vulnerable found themselves struggling to make rent and mortgage payments.
Although the market will stabilize with interest rates there is no expectation that the current value of homes will drop. In some municipalities the value will continue to increase due to predicted migration from larger centres. (KPMG 2022)
Sources
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