In what has become a sellers' market, a curiosity has surfaced in Barrie: the real estate investor.
While the entire area is a mecca for those racing out of Canada’s biggest city looking for a quieter place to live, the small city straddling Kempenfelt Bay also checks off all the boxes for those who want to park their money here.
“For anybody that is a real estate investor, Barrie is a really hot market,” said Barrie and District Association of Realtors president Chantal Godard, Messecar co-team leader with EXIT Lifestyle Realty.
A convergence of factors has made the central Ontario city attractive, says Godard.
She points to the city’s high rental rates, resulting from the shortage of available rental units.
According to the PadMapper Canadian Rent Report for October, the average price for a one-bedroom apartment in Barrie is $1,440 and $1,670 for a two-bedroom. That’s actually down more than three per cent from a year ago.
That places Barrie as the eight most expensive Canadian city for rental housing.
The city’s Official Plan also now targets intensification, resulting in easier conversions to duplexes, increasing the potential income generated from one house.
On top of all that, historic low interest rates has made borrowing attractive and investing in traditionally safe areas, like guaranteed investment certificates, unattractive.
Meanwhile the inventory of houses on the market for sale is considered very low, driving up prices the the average price of a home has reached $600,000.
The result is fast turnover in the real estate market, which can attract multiple bids for one one home and bids over asking, says Godard.
Combined, those factors attract a variety of investors looking to sink their money into something other than the stock market and low-interest guaranteed investment certificates and bonds.
“Perhaps that’s why we’re seeing that influx, if you will, of people wanting to invest here,” said Shannon Murree.
Murree, whose MovingSimcoe.com team with RE/MAX Hallmark Chay Brokerage is investor-focused, suspects there has been a pent-up demand that is now being realized as a result of the convergence of all those factors.
She is seeing a level of organization which includes the development of joint ventures or teams of investors who rely on the strengths of individual members, such as a primary investor coupled with a hands-on person.
“It’s people learning how to leverage what they can do in order to do different wealth creation strategies,” said Murree, adding that includes a strategy to buy, renovate, rent, refinance and the do it all over again with another property which might apply to an estate sale or those sold as-is. “I’m getting more increases and more inquiries on that as well in this market.
“People are looking at more strategies that they can do. … Definitely the demand is there," she added.
Godard and Murree say the attraction for investors has been sustained by the encouragement by the City of Barrie to create additional units on residential property.
With the goal of accommodating a population of 210,000 by 2031, the city has a focus on creating a higher density through development, redevelopment, infill and expansion or conversion of existing buildings.
In order to achieve that, the city’s Official Plan designates intensification nodes and corridors that have the potential to accommodate more people and housing.
“So if your house happens to fall into an area where there is an RM-2 zoning, you can do a legal duplex a lot easier than you have ever seen in the past,” said Godard. “Because they need to see that intensification, they’re encouraging people to start creating more doors, basically.”
That stems from the competition for rental housing in Barrie, considered in very low supply.
Godard says her office is seeing multiple offers, prospective tenants offering more than what is being asked and instead of paying first and last months’ rent, they’re putting six months down.
According to recent data from the Barrie and District Association of Realtors, the average monthly rental rate of a three-bedroom unit in Barrie is in the $2,400 range while two bedrooms average at $2,100.
“That’s nuts,” said Godard. “So for somebody that’s a real estate investor, it’s a great market for them to be in.”
And a lack of supply on the re-sale and new housing markets, particularly in the more desirable lower pricepoint, is driving up prices.
From the selling perspective, the demand is for properties in RM-2-zoned areas, those that have already been converted to a duplex or those with a separate entrance to a lower level with potential for duplexing, say the realtors.
That’s attractive for both the investor and homeowners looking for rental income to qualify for the mortgage.
“There’s multiple offers on all of them. So from the buying standpoint, it’s a little bit harder to get into the market in Barrie, specifically, and they’re getting snatched up quickly,” said Godard.