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June 6, 2021

Peter Squire on the current state of the Winnipeg regional real estate market as of mid-2021

Peter Squire on the current state of the Winnipeg regional real estate market as of mid-2021

Peter Squire is the Vice President, External Relations & Market Intelligence of the Winnipeg Regional Real Estate Board. In this episode we discuss the latest transaction volumes and values. We also talk about multi-family, vacant land sales and the new ...


Peter Squire is the Vice President, External Relations & Market Intelligence of the Winnipeg Regional Real Estate Board. In this episode we discuss the latest transaction volumes and values. We also talk about multi-family, vacant land sales and the new mortgage stress test.

Transcript

Adrian:

I'm joined today by Peter Squire, who is with the Winnipeg Regional Real Estate Association. Do I have that new name, right?

Peter:

Well, we're now the Winnipeg Regional Real Estate Board. We were formally, going back a few years, the Winnipeg Real Estate Board, but now we're recognizing that we're much larger in scope outside the city of Winnipeg area, we go down to Morden/Winkler area. And just more recently last year, we were, in 2007, we were the Winnipeg Realtors Association, so that's how some people may have known us for a while. But we've rebranded ourselves in 2021 to now be called the Winnipeg Regional Real Estate Board or WRREB for short.

Adrian:

Can you tell us a little bit about yourself and about REN sort of as an overall organization, what it does and what it is for?

Peter:

Well, more of the organization than me, I'll say a little bit about me, but the organization's actually been ran a lot longer than me. It started in 1903, so we're a long established association really started at that turn of the century to probably bring some law and order to a really frenetic market at Portage and Main and Winnipeg's history when it was really starting to take hold and was then called the Chicago, the north, and now starting to bustle again in 2021. But back then, so we actually had one of our founders is Charles Enderton, was the gentleman behind our [inaudible 00:01:50], really it's considered the first planned suburb in Winnipeg, and you know, Adrian, as someone living here that Crescentwood, it's one of our most historical neighborhoods and very sought after and very central, of course, not far from our downtown core.

Adrian:

It definitely has some of the most interesting and beautiful multi-family condominium and apartment complexes in the city.

Peter:

Oh, for sure. I mean, Crescent would, it's just one of the signature, I think, communities that we have a lot of them, as you know, a lot of really interesting neighborhoods throughout Winnipeg and that's one of them. But yeah, so our history really does go back many years. And in terms of who makes up our board, we're largely a realtor association. We have approximately about 2,000 realtors now. We're close to 2,100 members and that's not just in Winnepeg, but that's across our entire market region.

Peter:

Like I indicated, we have some very strong markets outside of Winnipeg like Steinbach and Morden/Winkler and Selkirk and Stonewall and many ... Old Bank, and many areas outside Winnipeg. Yeah, so we're a very active association. We run the multiple listing service locally for our entire province, not just for our market region. So we have a very strong IT department and so we put a lot of emphasis on improving our technology offerings to our members so they in turn can help their clients be more successful in their transactions when they're buying and selling real estate in our local market region.

Adrian:

Now you mentioned that the association has been around for a very long time. How long have you been in your role and what is your role?

Peter:

Well yeah, I've been around a long time too, but like I said, the mayor teased me one time that no, Peter, you're not that old, are you? I'm talking about our mayor, Brian Bowman. But no, I've been around nearly 30 years, so I've been around a long time with the association. And my current title is Vice President of External Relations and Market Intelligence, and my original title was Director of Public Affairs.

Peter:

And what happened is I kind of grew into my job and I got very ... In doing the market releases, which I still do every month, I got really into the market side of real estate and started to become more adept at understanding what was behind that market that I was observing and how that obviously, would not only affect issues that are important to the future development of our city, but how was that evolving. So I kind of got into a role of market analysts, which I've established for probably at least 15 solid years now where I am considered the local MLS market analyst for the real estate board, and I'm a kind of a go to for media as well within this local market.

Adrian:

Now I personally came to Canada in 1992 from Germany, so about the time that I think you were starting in this role.

Peter:

Correct.

Adrian:

What is happening with real estate values and transaction volumes this year compared to the same period last year?

Peter:

Well, it's like we've gone into a whole new orbit, a new level, Adrian. COVID has really fast-tracked our markets, like put a real strong accelerant on it, so what we've seen this year is really something we've never really seen before in terms of activity. So our sales, for example, we just completed May, got over 2,000. That's only the second time in our history. April actually set an all-time record of 2,055 MLS sales. This past month, we were at 2,006. So our previous record going back to a really solid May was 2019, when we were just over 1,700, and we thought that was quite outstanding.

Peter:

Now, given what was happening last year, we bumped up into the near 1,900 a few months after we came out of the initial shutdown in April and May of 2020, and we've never stopped since June. So now we've been on a 12 month run where every month has been that much better than the same month any previous year. So we've now been on a 12 month runs. So fails year to date the dollar volume, they're up around 68% dollar volumes, even higher around 70%. So our sales are clearly much higher overall for MLS, and then if you look at different property types, condominiums, duplexes, and townhouses have all doubled. They're well over a hundred percent from the previous year. Condominiums are sitting at 122% increase over the same time last year in terms of year to date sales for the first five months of 2021.

Peter:

So like I said, Adrian, we're really seeing a new level and what I've attributed to beyond the historic low interest rates, and I think Nick Nanos covered that well, who does a lot of good polling across the country, including on real estate with his Bloomberg Nanos Consumer Confidence Index. What really it is that really galvanized many Canadians and whether it be homeowners or even renters to look at their own space and situation and really determine how they wanted to move forward during these COVID times.

Peter:

And housing has been one of those key areas, and real estate in general, where people have reexamined that. And in our case, and not just in our local market, but across the country, people have looked at how do they want to live. And in many cases, that's been a different kind of space configuration. In some cases they need more space to work from home, or if they're teaching the children at home because their kids are no longer able to go to school in class, so it's remote learning, it's remote working. So that's really not only some movement outside the city, but within the city, and it's also changed things within the different market segments.

Peter:

While single-family home has clearly had the strongest demand, we're now seeing condominiums really come back strong at the end of 2020 and into 2021, where again, we're seeing levels like I indicated to you, where condominiums are now ... They were just under 300 in May and a good month for condominiums, even in a busy spring market would have been up to around 200, and we would consider that a very strong month for condo sales within our local market. Now we're nearly bumping up to 300.

Peter:

So it's just really brought us to a new level of real estate activity. And pricing has kind of followed along with that. Because of that hyper sales activity, we just haven't had enough listings to keep up with that demand. So we're certainly hoping as things get better with our vaccination in Manitoba, that more people will feel comfortable in putting their properties on the market and we'll start to see at least a little bit more semblance of balance. But right now we're clearly in a sellers market within our entire market region.

Adrian:

And when is the last time that the Winnipeg real estate market would have experienced such a dramatic shift in volumes, either up or down?

Peter:

I don't think there's ... I mean, maybe at the turn of the ... Maybe in 1903 when ... And I don't have enough historic records back then because I don't think our stats were all that solid as they are now with our MLS system, but in all honesty, the most recent time, it's a close approximation to a little bit, what we're seeing in terms of all those multiple offer situations and bidding wars and above list price sales, which were nearly 60% for single family homes in May, and even 20% for condominiums, was probably 2007, 2008.

Peter:

Where that was for a different reason though. We did have some favorable rates, not as low as they are now. It was more to do with the fact that we didn't have enough rental in our market. We really had a scarce supply of rental accommodations within our entire market, and we also had a very aggressive provincial nominee program in terms of bringing in new immigration to our province, a very successful one I might add. And we just didn't have the supply to meet all the newcomers that were coming, including just not enough rental in general. We were losing some from some older ... Some were being demolished, some were being converted to condominiums.

Peter:

So that situation really created a default for anyone coming here to buy a home, buy a resale home, which was the best option for them. It did drive up double digit price increases in our market for six straight years, and it really just put a lot of pressure on our market. And we, again, like we're seeing now, for that reason we weren't able to keep up because of that again, excess demand. And it wasn't until about 2011, 2012, where things started to settle down and we have, as you probably know, Adrian, seen a lot more multi-family construction in the last few years, including in 2021. So that's certainly helping alleviate that rental situation. Now it's more a situation where there's that many more people that are into the resale, just housing market in general, due to what COVID has created.

Adrian:

It's interesting, in 2009, I actually started my condominium property management company, Imperial Properties, and at that time we were the recipients of many of the apartment block conversions turning into condos, managing those buildings, and we continue to manage those today, I think three or four dozen of them. And it's interesting because this year we are seeing more units change hands in those buildings than ever before, and we can tell just from when people request their condominium documents. It's certainly interesting to see the evolution from when we first took over those buildings in 2009 to 2012, to now where there was consistent moving in and moving out, but there's definitely a lot of action right now on those units.

Peter:

Well, again, like I said, and that's just more evidence from what we're seeing on our multiple listing service or MLS, what I've explained of the hyperactivity and how much it's increased from this year over last year. But in really all property types, just that general movement that's happening, where people are making moves. It's like everyone's on the move to some extent, and a lot of that movement has been within the real estate area, right?

Adrian:

Yeah.

Peter:

I mean, and the other thing that's happened, and I should mention that, especially within our large market region that we have, we've really seen a step up in vacant land. So again, that's another example. Our actual vacant land year to date is up 162% for the first five months, so vacant land has literally exploded off the charts. And a lot of that's outside Winnipeg because there just isn't a lot of vacant land available for sale within the city of Winnipeg, so really it's more of a rural phenomenon.

Peter:

And even this last month, we had three vacant land, I consider them prime development land sales that were sold through our MLS system that were over $12 million with just three. One of them was over $5 million. So I mean, it just shows you that because we are seeing the shortage in supply, obviously, developers and other investors are looking at means to how can they bring on more supply into our local market.

Adrian:

I think we still have a bit of a shortage of inventory. We have rapidly increasing values and on June 1, [inaudible 00:14:09] and then the federal government also joined in, on changing the mortgage stress test or the qualifying rate from 4.79% to 5.25%. What effect, if any, do you think that's going to have on our current market conditions?

Peter:

Well actually in anticipation of this podcast, Adrian, I again, I'm not a mortgage broker like yourself, but I do talk to mortgage brokers that are members of our board, and I talked to one of them recently, and my sense from talking to him and also even just what I've read is it's roughly about a 4% hit in terms of reduction in what you will qualify for based on whatever your current financial situation is.

Peter:

So in our market, given that it's still by far one of the most affordable housing markets in the country, I don't think it's going to have a significant impact on most buyers in our market. What I think is going to be important is that when they're working with their mortgage broker and their realtor, they're going to have to just become more aware of what that limit is now based on that new 5.25% qualification rate. And then when they go into a buying situation, they know exactly where they're at.

Peter:

So when they do get into those multiple offers situations, which are frequent now, they need to know what is the most that they can offer on that home. And unfortunately, for some, as we're finding out, there's only one successful outcome for what could be a number of people bidding on the same home. So that's going to be one of the outcomes that there may be more disappointment as a result of that limit being reached quicker than they'd like, based on some of those above list price offers.

Peter:

But in general, I still think there's lots of affordable options within our market, and as I pointed out on the condominium side, the index price even in May was about 200, 2,000, where on the CREA's home price index, which is a more accurate really assessment of prices for a typical apartment condo and for a single family home on that same index, it was about 353. So you're seeing quite a spread between the two.

Peter:

So again, what we're seeing as I've indicated, condominiums are now picking up in sales. So there are options if that single family home based on these higher qualification rates may not fall within that buyer's affordability range. So there are other options within our local market and even going outside a market, as some are finding more land and more home outside the city. So if a neighborhood within the city may have become too expensive for them to purchase.

Adrian:

Between resale and new condominium developments, do we have sufficient inventory to meet current market demands?

Peter:

I would've said to you, if you would have asked me that question a year or two ago, I would have said we're over supplied in the condominium market.

Adrian:

Yep.

Peter:

Adrian, and even CMHC was highlighting that when they were doing their quarterly housing market assessment updates. But now I would say that's not the case anymore. Our condominium supply, given that we're selling nearly 300 units a month, I think we're down to around two to three months, where single families maybe a month. So you normally want about four and a half months to get into more of a balanced healthy market, even five months would be preferable.

Peter:

So I would say without knowing ... Where I don't have the knowledge that some others do is how many new condo units have come onto the market. We don't capture all them on our MLS, but based on what's happening on our current MLS, we certainly are getting tighter in terms of what condos we have to offer there. We're certainly in better shape with condominiums than single family homes, especially within a number of highly sought after neighborhoods throughout Winnipeg. But having said that, it really is going to be dependent on what new condominium units can come to the market.

Peter:

And then the other thing you have to be mindful of is where those units are, because again, location, location, location. There may be projects where there just isn't the same desire to buy into that project over another area, right? So that's where you always have to be careful in doing your assessment on something like the condominium market.

Adrian:

Do you track rental vacancy rates in your association at all?

Peter:

Well, we actually follow like others.

Adrian:

Yeah.

Peter:

When CMHC comes our with their annual report, but we don't have an ongoing monthly monitor, but we have kind of a fairly good idea where that's at. We do still try to be aware of how that might relate to our current housing market. I know I've worked closely with Dr. Carter, who's really a well-known local housing expert that's done work across ... Internationally, and he's done some work with the University of Winnipeg kind of a comprehensive housing assessment review of Winnipeg's situation and they've even gone beyond Winnipeg. And I know some of that is concerning in that the renters in some cases are not earning enough income that would put them in a position to get into ownership.

Peter:

So we are trying to always be aware of where the balance is and where those buyers may come from and how they kind of work together, because you can't, as you know, can't look at the market in total isolation from whether it be new builds, new homes to rental, to the existing resale market, which our MLS largely captures that.

Peter:

Though I want to add though that in the last few years, and especially out in some of the rural areas, our MLS is starting to capture more of the new home sales in some of these areas, and it's kind of a growing segment within our sales. So we're proud to say that we're now seeing more new home sales and some condo sales as well on our MLS system, not just the resales.

Adrian:

You may be the most qualified person in the city to tell me, what do you love about Winnipeg real estate?

Peter:

Oh man, that's quite a question. Well, I mean, I think what I love about real estate in Winnipeg is just the richness and diversity that we have to offer. And I'm talking about whether it be older, newer, different styles, forms, neighborhoods, the price ranges are incredible. Like I said, the typical apartment condo still is selling for around $200,000. Single family homes, while they are getting more expensive, were now just bumped up to $400,000 as an average single family home price within Winnipeg.

Peter:

But having said that, there's a lot of homes selling for much lower than that, even under $300,000, though it is getting harder. But no, I think in terms of real estate, it's really the richness of what we have to offer people, and that includes even development opportunities and some of the excitement around what's going on downtown and even with some of the infield developments.

Peter:

And so I really think Winnipeg is a prime city for future development and renewal. That's the other aspect, Adrian, that I think is really exciting about Winnipeg. We have a city with a lot of older housing stock, but to me, that's also an opportunity to do more infill and do more renewal of that stock, and we're seeing that happen. And I've been really pleased, and I don't know if you're aware of this, but I've been involved in an inner city housing initiative called Housing Opportunity Partnership, where we built nearly a hundred infill homes in the west end and north end of Winnipeg, and again, that will continue with groups like us and Habitat for Humanity because again, there are opportunities and neighborhoods certainly looking for groups like ours to build new opportunities for affordable home ownership.

Adrian:

Thank you for your time today, Peter.

Peter:

Oh, glad to speak to you, Adrian.

Peter Squire

Vice-President of External Relations and Market Intelligence

Peter has had a fascinating career in public affairs for over thirty-five years. He is passionate about getting involved in issues and projects that will enhance Winnipeg’s quality of life. One which comes to mind is the Canadian Museum for Human Rights where he embraced the challenge to get REALTORS® behind supporting the museum here and across the country.

Peter is Winnipeg Regional Real Estate Board Vice-President of External Relations and Market Intelligence. He is a keen media commentator and enjoys keeping the public informed on what is happening in our local real estate market.

Peter serves as a director on the Winnipeg Housing Rehabilitation Corporation which is active in building and providing affordable housing. He has also been a strong advocate for neighbourhood renewal and home ownership as co-founder of Housing Opportunity Partnership (HOP)