With enough money saved for a down payment on his first house, and interest rates at historically low levels, everything is in place for Thomas Rowland to take that plunge.
Except there’s nothing to buy.
In Mitchell, anyway, which has been a “sellers” market for quite some time, as a confluence of factors have all come together to make it extremely difficult for first-time home buyers like Rowland.
The 21-year-old said he’s made at least three offers on various houses in Mitchell the past few weeks, all of which went over the asking price, making it a little frustrating since he’s been looking for a house, casually at least, since last September.
“It’s hard to compete when a lot of houses are going way over, that’s for sure,” he said.
After literally everything shut down over the COVID-19 pandemic, Rowland said he wasn’t sure what the market would look like now that the province has eased regulations in this region.
“I wasn’t sure if things would go down, or plateau, but they just seem to be slowly going up,” he said. “It also seems like more and more people are also itching to buy so it makes it hard to compete.”
Real estate agent Heather Ward has been trying to help Rowland find a starter home since last fall, and says he’s not the only one coming up empty.
“It is a seller’s market. We are critically low on inventory and if you’re thinking about selling, now is the time to sell,” she said.
Huron-Perth Real Estate Board statistics show that the price for houses sold in Mitchell were $50,000 higher this July than last year, from $375,000 to $425,211; and single-family homes on average were sold for $419,720 in July, more than $33,000 higher than the same month in 2019.
Also last month, the sale to list price ratio was at 107 per cent – meaning prices on average went seven per cent over the asking price. Ward said one recent house had more than 30 showings over a five-day period and of the six offers received, four were cash offers with no conditions. It went for 18 per cent over the asking price or, in this particular case, close to $60,000 higher than listed.
Historically-low interest rates and limited inventory have aided in the rise in value for houses in Mitchell. That, plus the influx of buyers from Kitchener-Waterloo and Guelph has driven the prices up, as home owners have realized they can successfully work from home plus can purchase a “wonderful” home in Mitchell for that kind of money. In the city, they won’t be able to get near the home for $350,000-$400,000 they’re spending here.
Normally, there would be 35-40 listings but there’s less than 10 at the moment and has been for some time, Ward said, which hasn’t helped those seeking to buy, either.
Michelle Chessell, who’s been in real estate for 32 years, says this is the hottest the real estate market has been in the Mitchell area over that span. She said there are not a lot of viable options at the moment for the mature, senior population so they are staying in their houses longer, leaving those first-time buyers with little to choose.
“We’re definitely inundated right with out of town agents and out of town buyers,” she added, something that has crept ever westward. “Anything selling under $425,000 is really hot at the moment, and anything over the $450,000 range to me is a normal market and doesn’t get multiple offers necessarily.”
Ward said she’s not complaining about how busy the industry is at the moment, saying her phone didn’t ring from the end of March to the middle of May due primarily to COVID-19. She had a busy start to 2020, but the pandemic has done nothing to slow things down.
When she started selling real estate nine years ago, Ward said houses remained on the market for three months. Now, it’s rare they remain unsold in three weeks, especially for anything under the $400,000 price point which is all typical first-time buyers can afford. Anything worth more, from $475,000-$525,000 is not moving as quickly.
Both Ward and Chessell say COVID has also been a factor.
“I honesty wish I had a crystal ball and I knew what’s going to happen,” Ward said. “I thought maybe the COVID would drop our prices but it didn’t, it actually increased them.”
The variety of new developments currently underway in Mitchell is a good thing, with the 55-and over market at Upper Thames Village, open subdivisions and townhouses all catering to different markets, Chessell noted.
“Hopefully by having all this, the people that are in their established homes will now start picking and choosing and making a move to one of those subdivisions,” she said.
“The sad part with Mitchell is, it took a long time to get these developments going …. and all of a sudden there’s nine developments happening within a two-year time frame. If there had been a little stagger it would have been easier, because now we’re all trying for the same buyers.”
Normally in this market the busiest closing date has been June 30, coinciding with the end of school, but that has been thrown out of whack since COVID-19, too.
“June and July has been extremely busy and so far August is starting out the same way,” Ward said. “It doesn’t seem to be letting up any but I think you’ll see a slowdown in September when the kids go back to school.”
Chessell agrees, saying “your house is worth what your house is worth” and the market eventually will correct itself.
Rowland, who’s at home living with his parents outside Mitchell when he’s not away for work, says he’s using the delay to continue to save. The fact that he can offer no conditions is in his favour, but still nothing has shaken loose. He knows he needs to remain patient.
“At least I’m able to save and not being pushed out the door or anything like that,” he said. “But it would be nice to get my head in there anyway when I can because who knows what’s going to happen. It’s so unpredictable.”