Sorry. The <insert data segment here> went up by how much!?
Over the next several months, reports will come out comparing February 2022 or March 2022 or April 2022 to the same month in 2021. The result will be statistical mayhem as the number of sales and new listings will appear to be in double digit negative territory. Meanwhile, prices will be up by 20 or 30 or 60%, depending on where you look.
How? It's a byproduct of a number variables that all provide further evidence of why monthly year over year reports are dangerous territory.
Maybe it's best to think of real estate data as habanero peppers. Consume them with caution.
A few examples.
"Are the number of home sales dropping!?"
Prior to 2021, there had only been 4 months on record with more than 1,000 sales.
May & June 2016.
July & August 2020
Then along came spring 2021.
March had 1,149 sales: 64% higher than the 10 year average
April had 1,160 sales: 59% higher than the 10 year average
May had 1,009 sales: 25% higher than the 10 year average
February 2021 came in at 770 sales. Even though it was below 1,000 sales, it was still the biggest February on record, handily beating 2nd place Feburary 2017.
Get ready for several months of negative territory for the number of homes sold...
Yes, February 2022 was down 15% in the number of homes sold compared to February 2021. But here is an important thing to know. In spite of being down 15%, February 2022 still came with the 2nd highest number of sales, compared to previous months of February.
And that trend may well continue as we move through the spring market. Even though it will likely be historically strong, spring 2022 may not stand a chance.
AVERAGE SALE PRICES GET THE HEADLINES.
We can talk about the lack of listings or quick days to sell all day long, but the headlines are typically reserved for sale prices.
Are they up? Are they down!? By how much!!??
And with good reason. We have seen some of the most startling (and concerning) price increases in the last few years, none more shocking than what we've seen so far in 2022. Thanks to compounding supply and demand imbalance, there was a huge jump in prices from December 2021 to January 2022. But here is where pricing can get complicated. While Niagara has some cities with larger turnover (St.Catharines, Niagara Falls and Welland are the 3 largest cities for number of homes sold on an annual basis), there are several that have a smaller number of homes sold. The result is that a few sales can pull the data up or down by several percent.
That said, here are the average sale prices from December 2021 to January 2022:
| City |
December Average Sale Price |
January Average Sale Price | % Change |
| Niagara Region | $755,000 | $850,000 |
+ 12.6% |
|
St.Catharines |
$665,000 | $779,000 | + 17.1% |
|
Niagara Falls |
$741,000 | $849,000 | + 14.6% |
|
Welland |
$642,000 | $724,000 | + 12.8% |
|
Thorold |
$702,000 | $875,000 | + 24.6% |
|
Grimsby |
$894,000 | $1,028,000 | + 15% |
|
Lincoln |
$913,000 | $1,043,000 | + 14.2% |
|
Port Colborne |
$688,000 | $775,000 | + 12.6% |
|
Fort Erie |
$739,000 | $745,000 | + 0.8% |
|
Niagara-on-the-Lake |
$1,194,000 | $1,073,000 | - 10.1% |
|
Fonthill |
$1,136,000 | $1,029,000 | - 9.4% |
With each of those changes, there is a back story to understand...
For example, a big part of the change in Thorold relates to a huge boost in new or newer homes being sold or re-sold in an attempt to cash out and take advantage of a quick financial windfall.
Niagara-on-the-Lake has price swings from month to month on a consistent basis. That will happen in a town or city that only has 25 - 35 sales a month. Same goes for Fonthill (15 - 35 sales per month) or Lincoln (20 - 40 sales per month).
We can conclude, yes, prices came up in a big way in January. Going forward, here are some things to remember.
Month-to-Month volatility will continue.
Exhibit A:
Niagara-on-the-Lake
December 2021: $1,194,000
January 2022: $1,073,000 (-10.1%)
February 2022: $1,385,000 (+29.1%)
Exhibit B:
Niagara Falls
December 2021: $741,000
January 2022: $849,000 (+ 14.6%)
February 2022: $785,000 (- 7.5%)
...and outlier sales can have a big impact, even in the largest volume (# of sales) city in Niagara.
St.Catharines
December 2021: $665,000
January 2022: $779,000 (+ 17.1%)
February 2022: $801,000 (+ 2.8%)
...without that 1 big sale, February 2022: $771,000 (- 1.1%)
ARE THERE ENOUGH HOMES FOR SALE?
True, to a point. For the back half of 2021, it was a demand problem. Regardless of the supply of new listings, there were too many buyers, largely fuelled by out of town investors buying 3 or 4 or 7 homes. Things changed as we got into 2022 however.
This is how the number of new listings in January 2022 performed in relation to historic norms for the same month:
Niagara Region: worst on record
St.Catharines: worst on record
Niagara Falls: worst on record
Welland: tied for worst on record
Was it a coincidence that January 2022 produced both the lowest number of new listings while simultaneously producing major average sale price growth? This is most likely a prime example of the result of many months of pent-up demand colliding head-on with the buyer optimism that a new year can produce.
Along came February, aka The Comeback Kid.
Niagara Region: best on record
St.Catharines: 2nd best on record (best behind February 2011)
Niagara Falls: ...3rd worst on record. More on that in a minute.
Welland: 2nd best on record (just behind February 2021)
Sidebar. Niagara Falls is a confusing market at this point. February was the 8th consecutive month with very weak listing inventory. So, in spite of the number of sales being very much average, the pricing is up due to what is still an imbalance of supply & demand. That said, while prices jumped up in January to $847,000 (up $107,000 from December 2021), they settled back down to $769,000 in February. That'll be a market to watch.
WHERE DO WE GO FROM HERE?
Thus far, 2022 is looking confusing.
With so many variables in play, confusion is the most common reaction. War in Ukraine, increased interest rates and overall economic and global uncertainty would be reasons to expect a slowing real estate market. We've seen some indicators of a slowing market, but overall, that has yet to happen. Some segments of the market (St.Catharines for example) has definitely shown signs of increased traction and speed.
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