While there was still a week to go in October when I wrote this article, there was sufficient data to confirm that year over year sales activity was down significantly in October, with average pricing dropping from $900,326 in October 2021 to $838,641 as of October 23, 2022 – a 7.35% year over year decline.
Local inventory remains higher than historical levels, which is interesting given markets around us like Kitchener-Waterloo and Guelph have seen inventory levels decline from the highs earlier in the year.
Adjusting for market size, sales activity in Centre Wellington is lower than the markets arounds us, which again all points to the fact pricing in Centre Wellington is going to see further overall price declines moving forward. A larger than originally expected interest rate hike will occur just after I write this article, putting even further downward pressure on real estate pricing.
The question is where exactly the real estate market will go from here – and the truth is nobody really knows. Results will vary greatly from one area of the country to the other, so the statistics you hear in the national press can be confusing and misleading at times.
One thing I do know – houses and condos will still be bought and sold, regardless of the market we are in. Some real estate analysts are jumping on the bandwagon predicting significant price decreases in real estate in 2023, but I’m not sure I buy into that scenario for our area. Yes, pricing will continue to soften in the short term, and I do predict that overall pricing will remain pretty much stagnant into 2024.
In our market, I actually see some specific buying opportunities at the moment, and yes, I see a number of overpriced homes as well. Certain homes will continue to be more in demand regardless of overall market conditions. So, one cannot make a blanket statement on the state of the market.
I am still listing and selling homes every week, it is just taking more effort and time to get homes sold (on average homes are now taking 43 days to sell, but I am cautioning my clients that 60-90 days will become more the norm). Again, there is no need for sellers to panic, but patience will be tested in some cases. As always, pricing is key, and I’ve had to have some difficult conversations about price with my clients.
The prices of early 2022 are gone, and it is quite possible the gains in 2021 will be largely gone as well by the time the market bottoms out. However, we are still well above 2020 pricing. Staging, professional online presentation, extensive online marketing, proper selling strategy, aggressive follow up on every lead and expert negotiation are very important aspects in getting your home sold for the best possible price in this market.
I am certainly concerned about lack of affordability for first time home buyers, and do not see that changing much in the short term given the rapid interest rate increases. In Centre Wellington, we also simply do not have enough lower priced home options compared to, say, Kitchener Waterloo.
That explains, in part, why we are seeing more sales activity in Kitchener Waterloo compared to us, even adjusting for market size. We are actually seeing more local activity over $1 million, although again, the home needs to be priced right. Homes that were selling in the $1.3 – 1.4 million range 9 months ago are now selling in the $1 million to $1.1 million range.
Before I sign off this month, you will notice that our Mochrie & Voisin Real Estate Group is now a standalone brokerage. I will write more about this another time, but in a changing real estate industry, Erica and I felt this was the right move. As Centre Wellington’s top performing real estate team, we wanted to position ourselves for future growth, while ensuring that we will continue to provide an exceptional level of unrivalled service to our clients.
Until next month, take care.
George
