Don’t look now, but Winnipeg officially has a hot real estate market.
With average home prices — across all categories — up 16 per cent for the three first three months of the year compared to last year and inventory barely keeping up with sales, Peter Squire, the vice-president, external relations and market intelligence for the Winnipeg Regional Real Estate Board (WRREB) said: "We are in uncharted territory."
That is not to say things are out of control, however.
Pent-up demand caused by the lengthy COVID lockdown, families’ need for more space because of home-schooling and remote working, very low interest rates and enhanced savings has caused close to 50 per cent of homes sold in March to go above asking prices.
The 1,975 sales in March was the highest monthly total ever.
The release of the March WRREB numbers on Wednesday coincided with a report from the Angus Reid Institute that gives an idea of the pain caused by a housing market on steroids across the country.
Shachi Kurl, president of the Angus Reid Institute, said it’s no longer just a problem for the people in Vancouver and Toronto.
The survey showed Winnipeg was the place where fewest people wanted to see prices rise dramatically. But that’s what’s currently happening.
"Winnipeggers are used to the idea that you actually buy a home to live in for the long haul and it was not just seen as an asset class," said Kurl.
The report showed that among those who do not currently own a home across the country, one in five do not want one, 45 per cent say they would like to but can’t afford it right now, and 25 per cent say they would like to but doubt they’ll ever afford it.
"It’s like our value system has almost been up-ended," she said. "Forty to 50 years ago the idea of home ownership was almost equated with citizenship. It was part of the Canadian identity that one day you would own a home."
But it’s definitely not hopeless.
Kourosh Doustshenas, president of the WRREB said rebalancing the market does not require magic. It will just take those sitting on the fence, who have been thinking of selling their house, to go ahead and list it.
"It is an amazing market for those who want to put their home up for sale," he said. "You can’t get any better."
March hit an all-time sales number for the Winnipeg regional market with every category, including the almost moribund condo market that saw a 116 per cent increase in sales to 288 compared to last March.
And with average home prices in Winnipeg up 16 per cent during the quarter to $370,000, even those average condo prices are up to $241,000, a five per cent increase over last year.
There are obviously unusual factors at play caused by the pandemic.
Greg Mason, an economist at the University of Manitoba said one of the unexpected causes of an overheated real estate market is that the federal government’s financial relief benefited a fair number of people who actually did not need it.
"The COVID relief has probably caused more economic disparity both because the pandemic’s effects has been uneven and because government benefits have been uneven and poorly targeted," he said.
On top of all that, interest rates are at historically low levels.
While Squire notes that as much as there is sabre rattling from the Bank of Canada about rate rises, he said it’s not likely to happen this year or even next year considering the challenges the economy is still facing.
Now that the province announced in its budget on Wednesday that it is phasing out education property taxes by 50 per cent over the next two years, it may make home ownership a little less hard to manage.
The rising cost of homes is welcome to some and painful for others. But it’s really something new for Winnipeggers who have experienced a very stable market for so long (even while sometimes being jealous of the wealth creation enjoyed in other markets).
But Doustshenas said that despite the dramatic activity so far this year a healthy spike in listings this spring will go a long way to rebalancing things.
Martin Cash has been writing a column and business news at the Free Press since 1989. Over those years he’s written through a number of business cycles and the rise and fall (and rise) in fortunes of many local businesses.