How's the market these days?
Regardless of the market, that may be the most common question we're asked. For better or for worse, people are often curious about how the housing market is doing so here we are with the October 2023 play-by-play.
In order to understand any market conditions, it is important to get a handle on the underlying characteristics that are driving the trends. On a basic level, the simple supply and demand of the market is always a good indicator of how things are going.
Are homes selling fast? Slow? Are they even selling? Let's take a closer look.
HOW MANY ARE LISTED & HOW MANY ARE SOLD?
Whether you're buying concert tickets, shoes or a home, the available supply compared to how many people want to buy them/it, determines the price. Here in 2023, we've had a market that is mostly characterized by too many homes and not enough people willing to buy them.
This first graph shows the number of new listings (in pink) along with the number of sales (in black). The Bank of Canada interest rate hikes in June & July had a clear impact on demand as you can see monthly sales pulled back after gaining some relative momentum going into May. Here in October 2023, monthly sales levels took another step back.
In fact, October 2023 posted 402 sales which was 40% below the 10-year average and the lowest sales total for the month of October going back at least 15 years.
St.Catharines had a similar experience with monthly sales steadily declining since a fairly strong April and May. Similar to Niagara, October 2023 posted 100 sales which is 45% below the 10-year average and again, the worst in modern times for the month of October.
Niagara Falls was mildly different than the Region or St.Catharines however still well below the norm in terms of sales. October 2023 posted 88 sales which places 2nd worst, ahead of October 2022 which managed only 61 sales. The October 2023 sales total was still 34% below the 10-year average, but considering September was off by 50%, it's been a tough go in Niagara Falls.
IT'S ALL ABOUT SUPPLY.
If you've driven around any area of Niagara, you've likely noticed a few more for sale signs than expected. And by a few more, I mean, quite a lot more.
One of our favourite pieces of data is the 'Number of Active Listings' which measures just that. How many listings are active on the market from one month to the next. Let's have a look.
It doesn't take a doctorate in statistics to see very quickly in the graph below that something has changed here in 2023. Doing some quick math, October 2023 had four times as many active listings as October 2021. That is a significant shift.
Same for St.Catharines...
And Niagara Falls...
For what it's worth, our current active listing numbers are similar to 2014, so it's been a while since we've seen this level of supply.
What does that mean for home prices?
There are a few things we know for sure.
- home prices have become increasingly difficult to predict
- sellers asking prices are often not in sync with reality
- home prices aren't in a free fall as many think or expect. Rather, they've been bouncing around a similar altitude for several months.
Have a look at these graphs. There are 3 things to note:
- The pink line is the average sale price for all residential
- The black line is the Home Price Index average sale price which looks at the average sale price for what would be the typical, average, most common type of property.
- The grey dots show Bank of Canada interest rate increases.
So, yes, average sale prices are down from the (outrageous) peaks of early 2022. They were showing progress into April and May of 2023 but were directly impacted by the Bank of Canada interest rate increases of June & July 2023. Those increases directly impacted both confidence and affordability which threw the supply and demand ratios into an imbalance. Here we are approaching the end of 2023 as we've seen sale prices bouncing around at a similar level for 2, 3 or more months, depending on the municipality.
HOW ABOUT THE REST OF NIAGARA?
Not to be a broken record, but the smaller markets (Niagara-on-the-Lake, Lincoln etc) that only have 15 or 20 sales in a month tend to produce confusing data with large or small sales pulling the averages in opposite directions. If you're curious to know about your specific home in one of those towns, please reach out and we can put something together for you anytime.
WHAT HAPPENS NEXT?
It is all about confidence. Our comfort level with what might happen next will determine what we do and how we do it. If there is a feeling of interest rate stability mixed with the expectation of some relief, then we'll see more activity return to the market. As market factors turn towards positivity, we'll see more predictability. Homes will sell in 35 days rather than 65. Sale prices will edge up and people will be able to buy and sell with a bit more confidence. That is what we expect to see happen as we move into 2024. It may take until spring of next year, but we do anticipate a market that is a bit more friendly for all involved.
Could we be wrong? Absolutely, but we'll continue to keep track and report back!
As always, thank-you for reading. :)
DO YOU HAVE QUESTIONS ABOUT THE MARKET?