Cobourg House Prices Steady

In June, house prices in Cobourg stayed close to their record highs – despite talk of a housing price bubble which would suggest a drop.  According to the Northumberland Hills Association of Realtors, the average sale price of a house in the area in June was $849,437.  (Note that Northumberland Hills includes Port Hope, Hamilton and Cramahe as well as Cobourg).  Only 130 units were sold in the area, down 14.5% from June 2020 although this volume  is 12.1% above the five-year average.  Year to date, home sales totaled a record 749 units – this is up by 36.4% from the same period in 2020.  The graph below compares the trend with prices in the GTA and it’s clear that Cobourg is following the same trend.

June 2021 - House prices
June 2021 – House prices

Of course, the average hides differences between types of homes – e.g. “single family homes” (detached) versus Townhomes.  MLS also uses other bench mark indicators such as the MLS Home Price Index.  This is not well defined – at least not publicly – but although it’s a lower number, it’s supposed to allow for more accurate comparisons between neighbourhoods. Anyway, based on this figure,

The benchmark price for single-family homes was $656,800, an advance of 38.6% on a year-over-year basis in June. By comparison, the benchmark price for townhouse/row units was $473,500, up sharply by 43% compared to a year earlier.

So Townhome prices are going up faster than single-family homes.

Another distortion in prices can come if the mix of sales does not reflect what exists in the market.  For example, if there are a lot of high-end houses sold, that would skew the average higher.

Susan Hull, President of the Northumberland Hills Association of Realtors said:

“Like many other markets in Ontario, home sales have started to cool off from their unprecedented levels. However, sales activity remains above average levels for this time of year.”

I’ve heard realtors blame a lack of supply for the high prices but that’s hard to judge.  This is apparently an ongoing problem and is blamed by some on planning red-tape and delays.  But right now, fewer people are listing. The number of new listings in June 2021 was 6.9% lower than June 2020. There were 190 new residential listings in June 2021.  This is 3.7% below the five-year average for the month of June.  Coupled with the number of sales, this resulted in there being only 130 active residential listings on the market at the end of June, down sharply by 35.3% from the end of June 2020. “Active listings haven’t been this low in the month of June in more than three decades.”  The result is that there is only a one month inventory level – that is, it would take only one month to sell current inventories at the current rate of sales activity.

Some will be happy with the price increase – paper net worth would be higher.  Anyone wanting to buy would be unhappy.  Some will imagine that this will drive taxes up but that is simply not true – your taxes only go up because of a valuation change if your valuation went up more than the average.  See the link below for more.

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Dunkirk
9 July 2021 11:42 am

Our experience in Northumberland is no different from most of the country: we are in an asset bubble of valuation that should make all of our Councilors that ran in the last election with ideas about affordable housing blush. Historically low interest rates; the flooding of the markets with liquidity and lack of any meaningful policy moves during C19 and we have the ‘perfect storm’….Aside from the key & obvious economic indicators, we are seeing record profit gains for the mortgage lenders & Ontario now boasts 78,000 licensed real estate agents–the same number as the entire Empire State with double our population. Canadian mortgage debt for the first time exceeds our GDP…(.I knew when my dog’s veterinarian got her Real Estate license, the real, economic pandemic was in full swing……..)
A mortgage of our average Northumberland house price costs $3500/mth in after tax income. With the new ‘stress test effective June 1st you need to demonstrate to lenders that you can actually afford payments of $5,000 in after-tax every month. That happens to exceed the average pre-tax income of a Northumberland family by about $40,000….
Will people that work here, be able to live here?….Will companies(other than Boards of Education and Gov’t) be attracted to come here if they have to pay employees a living wage much higher than any minimum?
Mercifully–all economic indicators suggest that the market might have crested in March so that maybe we can focus our economic complaints to simple double digit inflation and wait for the correction.

Ken Strauss
Reply to  Dunkirk
9 July 2021 2:32 pm

It isn’t quite as bad as you say! In 2015 the median Northumberland family had an after tax household income of $62,187. So, yes, the median family can’t afford $60K/year but it isn’t shy by $40K.

MCGA
Reply to  Ken Strauss
9 July 2021 3:41 pm

Not to be more pedantic than normal, or at least much more, but there is a difference between “median” and “average” (mean). Not sure it makes a difference here, I’ll let you guys look that one up. I have seen three housing market corrects, in three different countries, and they all started at the point where first time buyers could not enter the market. The markets then froze as would-be sellers, expecting to get the higher asking prices, did not receive them. This was followed by a period of market freeze until those truly needing to sell began the price cut process. For many of the more highly leveraged sellers it was a very painful and ultimately expensive process.
Remember SNL’s Father Guido Sarducci’s one minute MBA: “Buy low, sell high.”

Last edited 3 months ago by MCGA
Ken Strauss
Reply to  MCGA
9 July 2021 5:19 pm

Indeed there is a difference between average and median. In my opinion median (half make less and half make more) is a better measure than average. The problem with average is that outliers (either very high or very low) can significantly distort things. If you prefer average, the average after tax income in Northumberland is $72,509 and the average after tax income for households with two or more members is $84,121. Based on that data, the average family can possibly afford an average house.

MCGA
Reply to  Ken Strauss
10 July 2021 9:45 am

Even the average can be a distortion. As an example, if the driving force of the market is first time buyers, how many of them make the average salary(ies) to qualify to buy the average house? How many of that cohort are also carrying significant school debt, which reduces their mortgage borrowing limit? Etc.
Lies, damn lies, and statistics.

Ken Strauss
Reply to  MCGA
10 July 2021 12:25 pm

Can we agree that there are sufficient residents with difficulties making house payments that our Councillors favour spending other people’s money on “affordable” housing?

MCGA
Reply to  Ken Strauss
10 July 2021 12:43 pm

Agreed, But I much prefer one part of government (either Federal, Provincial, County or City/Town) addressing any specific problem. Better to be very good at one thing than mediocre at a lot.

Ken Strauss
Reply to  MCGA
10 July 2021 1:59 pm

Better to be very good at one thing than mediocre at a lot.

It is always better to be very good rather than mediocre. Other than at squandering our tax dollars, where does any level of government excel?

Dunkirk
Reply to  Ken Strauss
10 July 2021 8:23 am

$40k Pre-tax…….

Mark
Reply to  Dunkirk
9 July 2021 8:38 pm

Ontario now boasts 78,000 licensed real estate agents–the same number as the entire Empire State with double our population. 
pop of Ontario 14,711,827
pop of NY  19,453,561
does not look double to me


MCGA
Reply to  Mark
10 July 2021 9:48 am

New Yorkers just feel twice as important.

MCGA
Reply to  MCGA
10 July 2021 10:59 pm

Thumbs down? Being born in Manhattan allows me to say that.

MCGA
8 July 2021 10:42 pm

Trees don’t grow to the sky and no market runs up forever. Back in the early ’90s the GTA had a 33% price correction on real estate after a decade of price increases. Paper gains are just that, whether in Toronto or Cobourg.

Kevin
Reply to  MCGA
9 July 2021 7:21 am

The Toronto correction of 30 years ago took over 10 years to recover when inflation is taken into account, so I have been told. Houses are often made from trees, also old steel shipping containers apparently. “Snow Crash” is a work of fiction a friend suggested I read, about 20 years ago. In the futuristic society some people lived in self storage units. I have heard all the local storage units are full. If you own a house renting a room can help you pay your bills. ‘Area 51’ John St. has a garden shed that seems to be used as a room (maybe not to live in). Perhaps we will soon have bunkies in backyards for people to live in.

MCGA
Reply to  Kevin
9 July 2021 8:35 am

Yes to the recovery timetable. If market history is your thing, a good number of economists and market professionals think of the asset trading world in terms of cycles…real estate can sometimes be viewed in a 30 year cycle.

Lemon Cake
Reply to  Kevin
9 July 2021 9:36 pm

A

Last edited 3 months ago by Lemon Cake
JimT
Reply to  Lemon Cake
10 July 2021 8:58 am

Eh?