Capital Mobility - Georgina's Luxury Real Estate Market

Monday Mar 11th, 2019


Georgina February 2019 Real Estate capital mobility

It appears as though somewhere along the line, people remembered that real estate is actually about land. We're seeing record-setting demand and prices for all things land-niche: estate lots; severable stuff; acreage; farms; etc. This gives me a little bit of faith that we not all be stuck in the hangover from Spring 2017.

So... what does this all mean exactly? Well - I guess it means that if you're planning to sell in a subdivision, your luck ran out in 2018. Generally, subdivisions "suffered" the most from the crash... but that's not exactly what happened, and I try my best to be exact, so let me try to summarize it succinctly: subdivision homes did not suffer the most, they inflated the most during the bubble, and because they include less land, they inflated on a less substantiated variable, the home itself (or as my CRE and appraisal friends call it the "site improvement"). Just examine the linguistics there.

So, to conclude, niche product is evolving as the performer in volume in today's market. That doesn't mean subdivsion homes aren't a good investment... to be honest, I'm a big fan of the price suppression in subdivision and I'm pretty bullish on them as investments, especially raised bungalows or split-levels that can be converted to duplex (er... "accessory dwelling units"). As always I will maintain, if you're buying a property for capital appreciation, you better have a PHD in economics. Your primary metrics should be focused on return, not growth. This isn't Bitcoin. It's planet earth.

Georgina February 2019 Real Estate Price Index

I like looking at the highest and lowest prices in the market with that cute little average median line in the middle. It's a simple graphic that tells me a lot about the market. It tells us a lot in a market like Georgina, where there's a huge gap between the top and bottom due to our niche products (acreage and waterfront.) It can easily show us how much the luxury market is propping up the average, or in this case, how little. There's a reason I've extracted the axis values here. I'm seeing here is that the price floor in Georgina is still moving up. That's a good sign of healthy, normal growth... I mean like... inflation-level normal growth.

Georgina's major competitive advantage has become affordability, rather than proximity. I'll add that this happened in spite of the fact that it takes longer to get from a house located west of Yonge Street to its corresponding access to the 404 than it does from Simcoe Landing... but that's another topic completely. 

Price disparity has become a real phenomenon as a result of simultaneously being the comparatively affordable town in the Greater Toronto Area, and the expensive, accessible, historic not-so cottage country. This has led to a very weird context from the approach of commercial real estate, especially commercial tenancies, 

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