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A look ahead at Real Estate in Peterborough for 2021…

Rainbow in Peterborough

It’s the question on everyone’s mind – what’s in store for the year ahead? Fair question. Since 2020 turned out to be a year no one could have predicted, we ask ourselves – what’s the year ahead going to look like? Of course, we all wish for that ‘crystal ball’ as we yearn for answers in this time of uncertainty. When it comes to real estate, many of my clients are wondering whether they’ve missed the boat on buying? Should they be selling? Will we see a correction? Are there opportunities remaining?

The bad news is – my crystal ball’s no clearer than anyone else’s.

The good news – I think we can look to a few simple facts that might help shape the answers we seek.

Have I Missed the Boat?

In some ways, it’s easy to say “yes”. Property values in Peterborough and the Kawartha’s have seen annual growth rates the past few years that have far exceeded the historical averages. To those that purchased 3 and 4 years ago, they should be pleased with the return on their investment. Does that mean its too late for others to buy? I believe the answer is No.

The key being that to those who bought a few years back, they have to sell now to realize those gains. If they hold the real estate, it’s value on paper that’s not materialized. In essence, it’s a theoretical value that can’t be used to pay for that new car. It can be potentially leveraged with a HELOC (Home Equity Line Of Credit) and it’s great to see your equity grow as you renegotiate mortgages, but it’s still value in theory.

To those that buy today, they begin a similar journey of hoping to experience some passive capital appreciation in their property as real estate values increase and hope to not experience a decrease if property values drop. But again, unless they sell, these are also value changes in theory only. Historically, real estate values have grown annually at a modest 2% average which aligns with general inflation trends.

If you’re looking to purchase real estate and expecting double-digit growth, I’d suggest you have missed the boat but I’d also add, that’s not historically a reasonable expectation. And yet, historically, real estate has been one of the safest and best investments over the long term. With that plan in mind, there is still room in this boat.

Market Timing

Most savvy investors will tell you that trying to time the market is next to impossible. Buy low and sell high is the perfect dream but reality is that it’s very difficult to time that equation. Doing so has left many people on the sidelines waiting while the market continues to move forward. As example, I’ve read articles back to 2016 of the ‘imminent market correction” that’s ‘just around the corner’.

To those that choose to wait for it – they’ve missed gains of approx. 50%+ in our region. Looking back – was a big correction really a reasonable prediction for Peterborough and The Kawartha’s in 2016? Given we had Highway 407 underway, major commercial powers such as Costco moving in, an abundance of lakes and green space, reasonable real estate values compared to the GTA…the stage was set for Peterborough to shine brightly I might add.

Should I Sell My Home or Cottage?

That’s an easy one. Do you want to? Do you need to? It’s certainly a sellers market as we continue to see strong demand and limited inventory. New subdivisions under development will certainly add considerable inventory into the equation, but we’re experiencing an exodus away from the GTA which isn’t likely to end soon. So are other towns that border on the GTA. Barrie, Orillia, Guelph, Hamilton.

Kasshabog Lake, August 2020

The story is the same as multiple bids rewards one purchaser and sends others back into the market to bid another day. The key to selling in this market is to capitalize on this demand and ensure you’re effectively marketing to this audience. If your potential realtors answer to securing top dollar is listing on MLS, it’s a signal they don’t fully understand the opportunity. There is much more to this and it starts with a marketing strategy.

Real Estate Trends in the Year Ahead?

OK, so while the topics covered above provide some clues, my personal – I repeat – personal beliefs are that the market will continue strong through 2021 and we won’t see the ‘doom and gloom’ many predict. Why? Simple. We’ve been weathering through the COVID storm and locally, real estate has benefited as many people have become accustomed to working remote. Vaccinations are coming this Spring/Summer. That’s going to lead to increased consumer confidence including travel.

The Kawartha’s rely heavily on recreation and tourism in our micro-economy. Additionally, with new residents to the area (homes and cottages) comes new customers for services and goods. They also have friends and relatives who get exposed to the Kawartha’s, and who in many cases, also consider the move as they experience the beauty of the area. The ‘snowball’ effect begins as suddenly Peterborough is on the map in their social circles, and the trend continues.

Personally, 90% of my sales have been to people in the GTA who have chosen this region to live or play in. Of course, a major driving force continues to be historically low-interest rates which enable more people to be able to qualify for mortgages. I’m not seeing much discussion about significant increases in interest rates in the year ahead.

Opportunities in Real Estate

Personally, I’m excited about the opportunities in Real Estate. The key is we have strong demand and that’s a recipe for success. While it makes purchasing Real Estate more challenging, there is no denying it’s great when it comes time to sell. It’s important to realize that growth in real estate value is often the result of 4 different factors – passive appreciation as the market grows (hopefully), active appreciation as homeowners fix up and renovate, positive cash flow as investors are able to generate revenue that exceeds expenses, and mortgage payments as the principal outstanding is slowly but surely chipped away at with each payment. Add them up and I believe Real Estate remains the safest and best ‘bang for your buck’.

If you’d like to discuss the Peterborough Real Estate market, or are interested in selling /buying in Peterborough or the Kawartha’s, let’s talk. I can be reached at 705.933.9191. All calls are strictly confidential.

*The information contained within this post is my personal opinion. It’s not intended to solicit those under contract with another realtor, nor is it intended as financial advice. I suggest you speak with professionals for legal and financial advice.