The home at 478 Cressy Bayside Rd., Prince Edward County.Harvey Kalles Real Estate Ltd.
Real estate deals are slower to come together in Ontario’s Prince Edward County these days as the rush to small-town and rural living that led to an influx of new residents at the start of the COVID-19 pandemic subsides.
Sales have slowed considerably in Prince Edward County in 2023, says real estate agent Miranda Miller of Harvey Kalles Real Estate.
“We’ve seen a lot of change since then,” says Ms. Miller. “Things aren’t flying off the shelves in four days.”
Prince Edward County has relatively few transactions compared with other markets because there are only a handful of sizable towns surrounded by farmland and vineyards.
In August, Prince Edward County saw 34 sales and 95 new listings, according to the Central Lakes Association of Realtors.
Nationally, home sales declined 4.1 per cent in August from July on a seasonally adjusted basis, according to the latest data from the Canadian Real Estate Association.
New listings edged up 0.8 per cent in the same period.
Sales across the country increased 5.3 per cent last month compared with August, 2022 while the average price rose 2.1 per cent in the same period.
Ms. Miller says the higher interest rates that have made real estate buyers more wary in many parts of Canada are also calming sales in Prince Edward County.
This year’s spring surge that pushed up prices in Toronto and other cities did not materialize in Prince Edward County, she adds.
The less frantic market means buyers have time to line up a home inspection, she says, and they often have the clout to negotiate. Sales with conditions are also common, she adds.
The property is carved from one of the area's original farms, has 530 feet of shoreline, a pebble beach and a sheltered cove on Lake Ontario.Harvey Kalles Real Estate Ltd.
New listings are increasing now that the fall market has begun, Ms. Miller says.
In early September, Ms. Miller estimated the area had about 330 residential listings.
“During the peak of COVID-19 we were lucky to have 30 listings at any given time.”
But buyers who waited out the frenzied bidding contests of the past are careful not to overpay in today’s cooler environment, Ms. Miller says.
“They say, ‘if this one doesn’t work out, there are 329 more we could look at.’”
She is also seeing some sellers cut their asking prices as they adjust to a dip in sales. Homeowners still had high hopes heading into the spring, she says, but many have now seen several months of declining values.
“People are just trying to meet the market where it is,” she says. “They tried their summer price.”
Inventory today includes properties ranging from century farms to newly-built subdivision houses and multimillion dollar waterfront homes, she says.
She recently listed a circa 1869 red-brick farmhouse on 3.7 acres with an asking price of $1.579-million. The property, carved from one of the area’s original farms, has 530 feet of shoreline, a pebble beach and a sheltered cove on Lake Ontario.
The three weathered yellow barns could serve an artist, a home-based business or an aspiring farmer.
The average number of days on the market is now approaching 50, she says, and the average price has dropped to about $790,000 from more than $1-million at the peak, she says.
Houses in need of some refurbishment were changing hands at about $800,000 at the peak, she says. Now buyers can find a fixer-upper close to the $500,000 mark.
The circa-1869 red-brick farmhouse on 3.7 acres has an asking price of $1.579-million.Harvey Kalles Real Estate Ltd.
Prince Edward County’s mix of rolling farmland, wineries, beaches and charming towns have made the peninsula jutting into Lake Ontario a popular destination for many years.
Various sets of buyers have ventured to Prince Edward County in waves, says Ms. Miller. For many years, homeowners from Toronto and other cities were purchasing weekend retreats with a view to eventually retiring in the area.
When cities went into lockdown due to the pandemic, many entrepreneurs arrived to launch new businesses and younger families moved in to give their children a small-town upbringing.
“During COVID-19, there was a big draw – if the internet was good enough – you could have a little cottage at the end of the County. People could have the five acres they had always wanted.”
A few are selling in order to move closer to their workplace in Toronto, she says, while others are hanging onto their property but also purchasing a place in the city.
Some city dwellers have also realized they haven’t settled into a slower lifestyle as easily as they anticipated. Some aren’t prepared for the quieter winters, says Ms. Miller, when many activities shut down until maple syrup season revives the social scene in March.
“We always like to have a great conversation,” Ms. Miller says of new potential buyers. “How much do you know? Is it the right fit for you?”
Another cohort of buyers who discovered Prince Edward County’s burgeoning popularity were investors. They began renovating the farmhouses and century homes to create short-term rentals for Airbnb and other platforms.
In 2021, Prince Edward County brought in new regulations aimed at offsetting the problems that came along with that model, including empty homes and dark streets during the winter months and overcrowding during the summer.
Owners of short-term rentals needed to acquire a license and adhere to rules governing such aspects as parking and safety.
Ms. Miller says the license was transferable to a new owner, which meant that buyers were willing to pay a premium to sellers who had the paperwork.
“That premium has narrowed,” Ms. Miller says, explaining that today’s higher interest rates have made it less appealing for investors to buy properties for short-term accommodations.
In many cases, investors were taking out a second or third mortgage on an existing property, she explains.
Ms. Miller adds that some existing owners of short-term rentals have grown weary of the constant turnover. They are turning to the long-term rental market instead.
Some sellers who have seen their property sit have also decided to offer the home for lease.
Those trends have brought some welcome supply to the rental market, she says, which gives people a chance to experience life in Prince Edward County for a year or two before they buy.
Signs of easing demand and increasing supply show that the housing market in Canada continues to cool, says Stephen Brown, deputy chief North America economist at Capital Economics.
The sales-to-new-listings ratio is now consistent with house prices stagnating, says Mr. Brown.
The renewed slowdown in monthly price gains mainly reflects the impact of high interest rates on demand, Mr. Brown says. In August, price growth generally slowed the most in those places where house prices are most elevated compared with incomes, including Vancouver and Toronto.
In Ontario, Ottawa, Hamilton-Burlington, London and Bancroft have also seen their markets enter a lull.
Looking at the national picture, Mr. Brown expects moderate average monthly price gains over the next 12 months.