Barrie set a new sales record in 2016 to cap an 'extraordinary year' for real estate and there's no end in sight for 2017, according to industry experts.
Tim Hudak, CEO of Ontario Real Estate Association, moderated a Barrie & District Association of Realtors speaker series event at Southshore Community Centre Wednesday morning.
"There's 70,000 real estate agents in Ontario. A lot of them can't sell homes because there's not enough supply," said Hudak. "We've got big demand, that's a good thing. The big problem is we don't have enough supply. We have more and more people chasing fewer and fewer homes. Prices go up."
Hudak believes the biggest barrier to new home supply is outdated government rules and regulations that slow down new housing or forbid it to be built in certain places.
"Speed up the approval process. It can take up to ten years to get a new subdivision approved," Hudak said.
He also suggested governments give local municipalities more flexibility on planning and home buyers more tax breaks.
Steady population growth and lots of buyers have created 'pent-up demand' according to Jason Mercer, the Toronto Real Estate Board's Director of Market Analysis and Services.
So even with new subdivisions coming down the pipe, there will be 'quick absorptions,' Mercer told the audience.
"A lot of these projects are going to be pre-sold at sales centres, so it's not like you're going to have a wide swath of inventory come on line," Mercer said.
Moody’s Analytics senior economist Andres Carbacho-Burgos also addressed the crowd of more than 100 real estate agents.
"My thought is that department of finance took action at a good time in restricting mortgage lending," he said. "It will be gradual over the next two years with a significant slow down in purchases and price growth. I see that as a good thing."
He says that Barrie is 20 percent overvalued according to Moody's analytics, a 'worrying sign' but they're still optimistic pending new homes being built.
"It's good that house prices don't go gang-busters here in Barrie even at the price of greater residential development."
The senior economist says we can be 'optimistic' on mortgage rates this year and even next. But 2019?
"Sooner or later, probably a little later - if you consider 2019 to 2020 later - you're going to have an upward trend in longer term mortgage rates and that will start bringing up mortgage rates as well," said Carbacho-Burgos.
He says new mortgage lending rules will result in a market fizzle, not a crash.
Mercer says part of a 'vicious circle' is the move toward people renovating instead of moving.
"You're changing the stock forever. Because If you look at an entry level detached home that's now being renovated you're seeing value added to that house. It's no longer an entry level detached home. You're changing the entry point into the market."
The average home price is around $500,000 in Barrie and if inventory remains low, the market in 2017 will continue to be a hot one.
"You're going to continue to see double digit price growth in 2017," Mercer said.
