The momentum we witnessed in the local Centre Wellington & area real estate market in April pulled back in May, leading to a further build up in unsold inventory.

More buyers are staying on the sidelines until they see ACTUAL (and meaningful) interest rate decreases rather than just the ongoing promise of rate decreases that have been predicted over the past several months (I’m writing this article before the June 5th rate announcement – but you are going to know if there was a rate decrease by the time you read this).

Even if there is a quarter point decrease, it won’t be enough to spur much of a change in activity at this point. In fact, I’m now predicting the market will be slower in June compared to June 2023.

Local activity reached a peak in June last year, followed by a significant decrease in sales activity for the remainder of the year. I continue to predict the last half of this year will be better than 2023 but will not be as busy as previously thought – largely due to the slower than anticipated reduction of interest rates.

As I have stated before, each market around us is different than the other – and even segments within the same market can be different. In Kitchener Waterloo, unsold inventory is also increasing – but almost 44% of unsold inventory is condos.

Guelph actually has relatively low inventory – especially in the freehold/detached category – meaning they still are seeing a more competitive market in that segment.

Almost half of the inventory in Guelph is condos – so condos are underperforming freehold homes. As I write this article near the end of May, our inventory in Centre Wellington & area just surpassed the highs we saw in 2023 – and overall buyer activity has dropped when we would normally expect an increase in activity at this time of year.

This is creating a more challenging market, although homes are still selling. It’s just that your house has to stand out – either being a 9 out of 10 or 10 out of 10 from a desirability standpoint – or you need to stand out by being attractively priced. And well marketed of course.

We are now into the final leg of what is traditionally the busiest time of year for home sales before things normally slow down a bit during the holiday months of July & August, so it will be interesting to analyze where we end up at the end of June (again, I don’t think we will hit June 2023 numbers based on current trends).

Uncertainty as to the number of rate decreases for the rest of the year, the questionable state of our economy moving forward, an upcoming election to the south of us and other geopolitical matters make predictions for the remainder of 2024 rather difficult.

Even if the bank rate goes down, fixed rates on mortgages remain stubbornly high thanks to current bond yields. And then we have the added factor of a large number of mortgages coming due for renewal in the next few months – where mortgage rates will double for many borrowers.

Will affordability challenges lead to a higher than normal number of homes coming to market for sale in the Fall?

While many in our industry continue to predict price increases for the remainder of the year, I continue to forecast pricing in our market will be largely flat – even though as I stated earlier, I see higher sales activity in the last half of 2024 compared to last year.

Homes will take longer to sell. A lot of our expectations have been swayed by a very unusual real estate market over the past few years.

So maybe this “slow down” we are feeling is more of a return to historical norms?

Just a thought. Regardless, the real estate world is never dull, and I look forward to keeping you updated on real estate as I see it on the ground here in Centre Wellington & area.

Thinking of buying or selling? Feel free to call me anytime at 519-766-3716 for honest, straightforward real estate advice.

Until next month, take care,

George