Spring real estate market to surge, say local realtors

Affordable homes still needed in Kawartha Lakes for first time homebuyers

After only modest residential, cottage and commercial property sales in the second half of 2023, Kawartha Lakes real estate professionals are looking forward to a more robust 2024 spring and summer market, expected to be fueled by a Bank of Canada lending rate cut in the spring.

Evan Connolly, realtor with Birdhouse Realty, John Harris, realtor with Bowes and Cocks Realty and Shannon Timbers, owner of Exit Realty Sunset Brokerage and director at large for the Central Lakes Association of Realtors (CLAR) that represents all agents across a broad swath of central Ontario and cottage country, are excited for the possibility of improved sales this year.

After 10 consecutive interest rate hikes over the last 24 months, relief may be on the horizon. Robert Hogue, the assistant chief economist at Royal Bank of Canada (RBC), told BNN Bloomberg the rate reductions are coming with one expected before summer and perhaps another at year end.

“Things have picked up a bit,” Hogue told Canadian Press in another March interview, “but the market is still slow. Affordability is a huge issue. We think until you get the Bank of Canada cutting rates, which we think will start mid-year, you are unlikely to see the market really pick up from a meaningful perspective.”

Locally, agents are already starting to see some of the increased interest by buyers and sellers detected by Hogue.

“The market is starting off looking better than 2023,” Connolly said. “There are serious buyers out and about. People are waiting for interest rates to drop and they want to get into the market when that happens.”

When asked what kind of rate drop from the Bank of Canada would be needed to return confidence to the real estate market, Connolly suggested that even a cut of 50 basis points (or ½ of a per cent) would bring the rate closer to the 4.5 per cent overnight rate commonplace in the first six months of 2023 “when sales activity and prices across Canada were still trending up.”

Harris also believes that 2024 holds the promise of being a better year.

“Sales are set to increase,” Harris said, “as interest rates ease.”

Timbers added optimistically that the spring market “is noticeably more active than usual, with an earlier onset, and appears very promising. Sales in February jumped 6.3 per cent and we haven’t seen numbers like that in ages.”

She said that “sky-high mortgage rates” are really putting a damper on things for a lot of folks wanting to buy.

“There are a bunch of potential homebuyers who are just watching from the sidelines right now,” Timbers said.

Assuming the Bank of Canada does finally start to trim its trend-setting interest rates, the Advocate wondered if there is enough inventory to meet the pent-up demand that seems to be out there.

All three agents noted there is adequate inventory available across Kawartha Lakes, spurred by more than 1,000 new home builds that will theoretically be on the market by the end of 2024, but that one particular type of home is in short supply: those that are deemed affordable to first-time homebuyers and young people still early in their homeownership journey.

“There is a lot of inventory,” Connolly confirmed. “People are interested but they are looking for affordability. Inventory has been impacted by population growth.”

Timbers agreed that there are not enough lower priced homes on the market and “that most folks are on the hunt for something a bit more on the affordable side.”

Harris adds that “inventory still continues to be a problem, especially affordable housing.”

When asked more specifically what kind of homes the bulk of buyers are looking for, all three agents focused on cost.

Harris said there are still buyers looking to scale up or scale down and some looking for a more rural setting, but the bulk of his buyers “are looking for something they can afford, particularly first-time buyers.”

Timbers said the local market is currently quite varied, “so pretty much anyone can find something that will fit their budgets and how they want to live. People are looking for places where they can feel part of the community and where there is natural beauty just outside their door.”

Timbers also made clear that she has many clients “who are looking for houses that don’t break the bank.”

Connolly added that his buyers are looking for homes under $500,000 that can be turned into income/rental properties or bungalows under $600,000 that are attractive for both seniors to downsize and young families just looking to start.

When asked if the Kawartha Lakes real estate market is still driven by the exodus of people leaving the GTA that kicked into overdrive during the pandemic, all three responded affirmatively.

“Absolutely, it is a clear and growing trend,” Timbers said. “Families are making decisions to relocate to the Kawartha Lakes region. They are drawn by the allure of a quieter more serene lifestyle, yet they remain tethered to their urban work commitments, willing to navigate the daily commute back to the city.”

Connolly agreed, noting the GTA has a “huge impact locally with many people working remotely. The extension of the 407 and improvements to the 35/115 have many people considering retirement in Kawartha Lakes.”

Harris said he has “a strong number of customers coming from the GTA who are buying newly constructed homes ‘on spec.’ The re-sale on these properties has not been strong so a lot of them are getting rented out.”

The Cottage Market

When asked about what the future holds for the all-important Kawartha Lakes cottage market, there was a difference of opinion between the agents.

“Cottage country sales have slowed partially because of the ridiculous prices that the waterfront market reached,” Harris said. “Generally, waterfront is a second property and is financed with discretionary income. With the wild nature of the market, financing has become more difficult on these properties.”

Connolly said that despite a year-round property on the Trent/Severn system with clean waterfront commanding a million dollars today, one of the real problems facing agents is high demand and low supply of cottage properties for sale.

Despite high interest rates and generally a requirement by financiers for a 30 per cent down payment on resort properties, Connolly said buyers are finding a way to get into the market by renting their cottages during the summer months.

“Buyers are using their cottages six to eight weeks per season as income producing properties,” Connolly said, “and this has made it easier for some buyers to get into the market.”

Timbers is looking forward to another busy cottage sales season noting that Kawartha Lakes “is a favourite for families seeking a summer get away. It is an area renowned for its cottage life, pristine lakes and boating adventures.”

Commercial Real Estate

The all-important commercial real estate market is also showing signs of picking up in anticipation of the Bank of Canada making the cost of borrowing less expensive.

Harris said there is currently enough serviced property for his commercial and industrial clients “but that there has been a steady turnover in units recently due to current economic conditions.”

Connolly predicts a bright future for commercial availability and sales as newly approved spaces like at the corner of Highway 35 and Colborne Street and on Thunderbridge Road come to fruition.

With regard to available commercial property, Connolly said that a shortage of parking in the “historical downtown is a huge issue” needs to be addressed. Connolly also encourages his investors to do their due diligence before entering the residential rental market as a landlord.

Timbers said the availability of commercial property “may vary based on current listings and market conditions.”

Harris and Connolly both believe that the municipality and school board need to get infrastructure built where and when it is needed.

“The 6,500 homes that Kawartha Lakes has agreed to build will really help,” Connolly said. “Its great. But having parks, schools and the rollout of services available will be important.”

Timbers would like to see the reduction and loosening up of “some of the building rules so more houses could be built and (with more supply) prices might cool down.”

Connolly added that there needs to be “big creative ideas” to solve the problems preventing people from getting into homes that include lowering closing costs and increasing the supply of skilled labour to power the construction industry right across the province.

“I want to see messaging change at the high schools regarding the trades,” Connolly said. “We need to give employers incentives to take apprentices on and make trades training more affordable.”

He also believes it is time to rethink the provincial land transfer tax, which “despite its best intensions has contributed to skyrocketing closing costs.” The tax, payable by the buyer at the time of sale, amounts to $6,400 in additional costs on the sale of a property worth $500,000, and only grows exponentially with the increase of the sale price.

Connolly praises the federal First Home Savings Account program that assists people in putting money away for a home purchase calling it a “good program.”

Timbers would like to see more programs in place “for younger folk and first-time homebuyers to help with downpayments.”

One thing the three realtors agree on is that all levels of government could be doing more to help get people into homes.

Top 5 largest neighbourhoods in Kawartha Lakes for expected new builds

Subdivisions (all Lindsay)

Kingsmen/Sugarwood (near Wilson Fields): 165 single detached units and 164 townhouse units.
Tribute: An estimated 200 units in 2024
Bromont (Gateway): Lindsay St. S/Hwy 7 – Estimated 100-150 units in late 2024
Hygge (Fernbrook): Lindsay St N – Estimated 30-60 units in 2024
Regis: Alcorn Drive – Estimated 30-60 units in 2024
Flato: Hwy 36 – 113 townhouse units draft approved

*excluding recent applications still under review, though this adds several hundred more units across Lindsay, Fenelon Falls and Bobcaygeon.

– Leah Barrie, Director of Development Services, Kawartha Lakes