Georgina’s real estate market is something I talk a lot about… mostly because I’m heavily economically invested in it – specifically, the majority of my real estate sales volume is in Georgina, and all but one of my investments are in Georgina. (is that a sufficient disclaimer?)

I’ve sometimes been caught using Georgina within the analogy of investing in the “worst house on the best street”… more specifically, that York Region is the “best street” in the Greater Toronto Area, and Georgina is the “worst house” on that street. Georgina’s been a bit of a standout in York Region generally because it’s sort of the most “drive ’til you qualify” friendly market in the GTA… and we have a lake. Everybody loves lakes.

I call it a standout because we seem to be holding strong in volume by comparison to counterparts south of Ravenshoe Road, especially those whose new-home supply sold in 2016-2017 (I’m looking at you, Newmarket, Aurora and East Gwillimbury). Apparently, it’s hard for vendors in that area to stomach the fact that they’ll be settling for a 300% cash-on-cash return rather than the 500% they’d hoped for. Excess supply in those areas is crushing the market, and I’m hoping I’ll have a chance to really evaluate that sometime this month. So, if you’re going to blame someone for price suppression, excess supply, and the state of the GTA’s real estate market, point the finger at your fellow consumers. If we all point a finger in the same direction, eventually it comes full circle, and somebody’s point at you, too.

/rant

Now let’s unpack and explore this crazy microcosm of affordable housing in York Region and figure out why we’re outperforming everyone south of us (relatively, of course.)

Georgina real estate prices, 2 year average.
Looking at the year-over-year change, we’ve got growth of something like 10% from February 2018 to February 2019. I see this year over year figure used incessantly to feign market growth. Isolating a single month to create an annual growth figure is stupid. Especially considering how much the spring market plays a role in average price creation for the entire year in a market like Georgina.

Georgina’s average prices have bounced along a sort of predictable volatility that shows no trend upward or downward. Obviously we’re down since the infamous “peak” of March 2017, but honestly, we’re seeing a little bit of average price suppression, and nobody seems to be talking about it. We are seeing growth in median price which tells me that there’s a bit of a selection bias here, and that we’re at the onset of the spring market, because bigger, more expensive homes are selling. This is a result of the demand during the spring market, which is increasingly families targetting a summer closing. Families characteristically buy bigger homes than other buyers. Bigger homes are more expensive. House prices didn’t increase from January to February, they type of house demanded changed.

Georgina February 2019 Real Estate capital mobility
It appears as though somewhere along the line, people remembered that real estate is actually about land. We’re seeing record-setting demand and prices for all things land-niche: estate lots; severable stuff; acreage; farms; etc. This gives me a little bit of faith that we not all be stuck in the hangover from Spring 2017.

So… what does this all mean exactly? Well – I guess it means that if you’re planning to sell in a subdivision, your luck ran out in 2018. Generally, subdivisions “suffered” the most from the crash… but that’s not exactly what happened, and I try my best to be exact, so let me try to summarize it succinctly: subdivision homes did not suffer the most, they inflated the most during the bubble, and because they include less land, they inflated on a less substantiated variable, the home itself (or as my CRE and appraisal friends call it the “site improvement”). Just examine the linguistics there.

So, to conclude, niche product is evolving as the performer in volume in today’s market. That doesn’t mean subdivsion homes aren’t a good investment… to be honest, I’m a big fan of the price suppression in subdivision and I’m pretty bullish on them as investments, especially raised bungalows or split-levels that can be converted to duplex (er… “accessory dwelling units”). As always I will maintain, if you’re buying a property for capital appreciation, you better have a PHD in economics. Your primary metrics should be focused on return, not growth. This isn’t Bitcoin. It’s planet earth.

Georgina February 2019 Real Estate Price Index
I like looking at the highest and lowest prices in the market with that cute little average median line in the middle. It’s a simple graphic that tells me a lot about the market. It tells us a lot in a market like Georgina, where there’s a huge gap between the top and bottom due to our niche products (acreage and waterfront.) It can easily show us how much the luxury market is propping up the average, or in this case, how little. There’s a reason I’ve extracted the axis values here. I’m seeing here is that the price floor in Georgina is still moving up. That’s a good sign of healthy, normal growth… I mean like… inflation-level normal growth.

Georgina’s major competitive advantage has become affordability, rather than proximity. I’ll add that this happened in spite of the fact that it takes longer to get from a house located west of Yonge Street to its corresponding access to the 404 than it does from Simcoe Landing… but that’s another topic completely.

Price disparity has become a real phenomenon as a result of simultaneously being the comparatively affordable town in the Greater Toronto Area, and the expensive, accessible, historic not-so cottage country. This has led to a very weird context from the approach of commercial real estate, especially commercial tenancies, but I’ll get to that in another post.

Georgina February 2019 Real Estate sales Volume by geography

I’m not massively surprised that Keswick South has returned to the highest-volume position in real estate sales in Georgina for February 2019. I was actually surprised that Sutton & Jackson’s Point usurped it for a brief, fleeting moment. I expect Keswick south to maintain this position through the spring market, and lapse briefly in the summer when waterfront sales peak.

Georgina February 2019 Real Estate sales volume metrics

All volume metrics point towards a market in equilibrium. Absorption period for a single product is 3.12 days, giving us a total market inventory of 156 days. 3 months of inventory is a pretty tight market. As long as we don’t get flooded with supply (we very well could) we could see some moderate price growth in the spring market that settles and tapers off (down) through the summer. I expect that March 2019 will give us a much more full picture of the market.

 

Georgina February 2019 Real Estate Sales, Days on Market and Sale to list price ratio

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