Low housing supply and high demand, which was amplified by COVID-19, has caused housing prices to soar across Canada, with average price up 19.9 per cent, according to the Canadian Real Estate Association (CREA). A significant lack of supply has been blamed for rising prices from coast to coast. While higher prices were typically a factor associated with large urban settings, markets outside of big cities have been feeling the pinch – including the Barrie housing market.

Even before the pandemic trickled cross Canada’s borders, available listings in the Canadian real estate market hit a record 14-year low. This supply shortage has helped drive prices up. In tandem with this supply shortage, high levels of international immigration (prior to 2020), low interest rates, and a large cohort of millennial homebuyers helped grow the demand side of things.

According to Tim Hudak, CEO of the Ontario Real Estate Association, the lack of supply is due to a shortage of new builds encumbered by outdated zoning policies. One area where these “exclusionary single-family zoning rules” are causing issues is in the Barrie real estate market.

A Peek Inside the Barrie Housing Market

Located just up Highway 400 about an hour from Toronto, Barrie has become a hot destination for those looking for a manageable commute, big-city amenities and access to some of Ontario’s best beaches when the summer temperatures hit. In comparison to Toronto, housing prices in Barrie are far more accessible for first-time homebuyers, but that gap is shrinking.

The latest numbers from the Barrie & District Association of Realtors show a slight dip in homes sold in Barrie from September to October 2021. Overall, 219 homes were sold in October 2021, 4.8 per cent less than September. The average price of units sold was $770,033, a decrease of 1.3 per cent compared to September 2021.

When we zoom out and look at the year-to-date numbers, a starkly different picture emerges. Both the number of units sold and prices are rising when compared to last year. From January 1 to October 31, 2021, there were 2925 units sold in Barrie. That represents 13.4-per-cent growth over the same timeframe in 2020.

The average sale price increased significantly, to $733,666, a whopping 31.2-per-cent increase over 2020. With this massive increase in prices, rent prices have also shot upward, putting Barrie fourth in Canada among cities with highest rental prices. It is no wonder why some industry leaders like Hudak are calling for a solution to solve the lack of supply and its influence on the high rental and purchase costs.

Cutting the “Red Tape”

In September, the Ontario Real Estate Association called for the Ontario Government to improve housing affordability by updating single-family zoning laws in high-demand areas. The plea was to target laws that make it illegal to convert a single-family home into a multi-family dwelling.

“You cannot build affordable townhomes for multiple families without red tape, runaround and exorbitant costs,” Hudak said. “Exclusionary zoning policies are at the heart of Ontario’s housing affordability crisis in high-growth areas and it’s time the Province steps in to modernize these archaic laws.”

Hudak believes that this problem impacts Barrie directly. “People who grew up in Barrie likely had a dream of affording a home in the neighbourhood they grew up in … Now that dream is increasingly out of reach,” Hudak said. “It’s a cruel game of musical chairs. There are a lot more buyers circling fewer and fewer homes.”

The Mayor of Barrie, Jeff Lehman, says that allowing homeowners to add secondary units to their homes has not been a silver bullet for affordable prices. “The problem we have had in Barrie, and what I think OREA needs to recognize, is that yes, they certainly create additional housing, but it’s often not affordable.”

Helping First Time Homebuyers in Barrie

With a lack of new construction to help solve the problem, Hudak is also looking for the province to help first-time homebuyers get their foot in the door. “Once you get a home, it’s easier to move up to a larger home than it is to get in the market in the first place, so we suggest either eliminating the land-transfer tax for first-time homebuyers or at least doubling the existing rebate to $8,000. That would certainly help people in the Barrie and Simcoe (County) area keep more money in their pocket for that move,” he said.

The Future of the Barrie Housing Market

With house prices rising and rental costs near the highest in the country, will these trends continue in the Barrie real estate market? Moody’s, a major credit firm, expects that the rising housing prices seen across the country will slow down in 2022 and into 2023. This is undoubtedly welcome news for Barrie homebuyers. More immediately, RE/MAX Canada’s 2022 Housing Market Outlook Report anticipated prices in Barrie could rise by 15 per cent in 2022.

As for the cost to rent, Barrie City Council recently changed its existing bylaws to allow secondary suites on institutional properties within the city. Mayor Lehman sees the move as a positive one, calling it “a substantial change to encourage more affordable housing in a form we know is affordable and which has been built already on church properties and on institutional properties elsewhere in the city.”

Sources:

The post Barrie Housing Market Battles an Affordability Crisis appeared first on RE/MAX Canada.