What happened with home prices in Niagara in 2023?
Let's look at it this way. Imagine buying tickets to a concert by a band only a few people have heard of compared to buying tickes to see Taylor Swift. In terms of Niagara real estate, early 2022 was Taylor Swift pricing (outrageous, shocking & sometimes illogical) while 2023 was more of a pretty good band that you kind of recognize and sort of like and sure, you’ll go to the show if no one else can use the ticket.
Everything changed. Demand was down, supply was up. uncertainty was up and with that, home prices languished.
What makes 2023 so starkly different from the previous few decades was the year that preceded it. The first 4 months of 2022 will go down as a market that we will likely not see again. It was mayhem, spurred on by low interest rates, fear of loss and a gold rush of investors looking to place their newfound home equity.
Why is that important? 2022 was a tale of two markets. The first 6 months of 2022 was red hot with an average sale price of $840,000, then the Bank of Canada showed up and raised the cost of home ownership (interest rates) which resulted in an immediate drop in prices. The second half ended lukewarm, or cold, with an average sale price of $695,000.
Why this matters is that there were so many sales at such a high price at the start of 2022 that the annual sale price ended up at $784,000. Remember, the second half was $695,000. In a related story, the average price of a home in 2023 was $695,000 as well. So, there are a few ways to chop this data up:
- 2023 in comparison to 2022 was down 11.4%
So, yes, prices are down on an annual basis, but the trend shows something different. It shows a market that is finding its feet after a turbulent 24-month-long run. Those sale prices are a direct result of buyer confidence, and that confidence was bludgeoned by the Bank of Canada over the past few years. Humans have a knack for recovering after an initial shock and that is what we've seen.
This graph shows you the average sale price in Niagara for 2022 and 2023 with the vertical rectangles showing the Bank of Canada interest rate increases. Note, the only sustained increase over the past two years happened in early 2023, a recovery that was quickly snuffed out by the rate increases of June and July 2023.
Stay tuned as we get into 2024. It will be interesting to see the market response to interest rate decreases, regardless of how small they are.