Windsor can skip the real estate panic: Experts
While the rest of Canada frets and panics over warnings the country’s housing market is headed for a cliff, Windsorites can rest easy, experts say.
Sluggish sales, heavy personal debt loads and hyperactive condo development in Toronto and Vancouver have led to dire predictions the country’s housing market is on the brink of a U.S.-style collapse. Experts are divided on whether it’s time to panic, but they agree that even if there is a bubble and it bursts, the price of homes in the Windsor region should stay fairly stable.
“We’re not affected by these types of things,” said Frank Binder of Royal LePage Binder Real Estate. “The economic forces that come to play in our area are purely local.”
It’s easy to see why homeowners in Canada’s big cities are starting to sweat.
The federal government has intervened in the housing market four times in four years, requiring homeowners to put more money down, putting restrictions on how much debt they can carry compared to their income and cutting the maximum length of time they can stretch out their payments from 30 years to 25. Finance Minister Jim Flaherty has said the rules are aimed at cooling an overheated housing market, while Bank of Canada governor Mark Carney has issue warnings about heavy levels of personal debt.
And of course, Windsorites are reminded of what happens when the real estate market crashes every time they cross the river. Housing prices may not be soaring on this side of the border, but a drive through Detroit’s blocks of dilapidated, abandoned homes serves as a reminder that things can get much, much worse.
Gregory Klump, the chief economist at the Canadian Real Estate Association, said it would be foolish for anyone to react to the headlines by selling their house and shoving their cash under a mattress, but it would be particularly foolish to do so in Windsor. Warnings about the “Canadian” housing market are misleading, because real estate prices are guided by local forces, he said.
In addition, all signs point to a recovering economy, which means a real estate crash is unlikely, Klump said. “The economic outlook isn’t consistent with the kind of things that lead to a massive increase in supply or a massive decline in demand, or some combination of the two.”
Two major concerns about real estate in Toronto and Vancouver — too many new condo developments flooding the market and buyers taking on bigger mortgages than they can afford — don’t apply to Windsor. Jobs that pay well may be hard to find, but once you have one, first-time buyers can make their payments with relative ease with the average price at about $170,000.
If prices did plummet in Toronto and Vancouver, one sector of the Windsor real estate market that might be affected is the sale of homes to boomers moving here to retire. But even if they get $600,000 for their homes instead of the $800,000 they were hoping for, the difference in prices in the Windsor region still spells a lot of extra golf games and trips to Florida.
“I believe there is such a gap in the values of homes here versus Toronto or even Vancouver that I still believe that buyers will continue to recognize the many benefits of relocating to our beautiful 100 mile peninsula,” Julie Green, of the Windsor-Essex Active Retirement Community Initiative, said in an email. “While the gap may lessen with a price correction in the larger cities, the additional pluses such as our fabulous climate will continue to be a draw.”
It would take quite a price drop for housing prices in other Canadian cities to match Windsor’s.
For between $350,000 and $375,000, which is about the Canadian average, you can buy a five-level, four-storey house in Tecumseh, a two-year-old, five-bedroom raised ranch in South Windsor, or a riverfront property with a dock in LaSalle. Or you could move to Toronto, where you’d be looking at one-bedroom condos or tiny bungalows far from the subway.
Hoping to buy a house in Vancouver for that price? Forget it — there’s not a single one listed. Try a 700-square-foot condo instead.
“Will we still be a good choice in terms of the affordability index? You betcha,” Binder said. “We’ll have a lot of people that will still move from other areas to this area.”