No one needs to be told that participating in the real estate market over the year has been the equivalent of a fast moving train with few if any stops amidst an ever accelerating speed where things are a blur.
The real question is when or will this seemingly non-stop train start to slow down and eventually stop? From a real estate perspective people are asking what should we do, try and jump on or wait from the next train provided there is one? No one can ultimately be sure of the answer but as a long term REALTOR® I will always keep you abreast of what’s happening today and what we might expect in the near future as a result. Further, any opinion or information I share is always based on looking at the facts and supporting data which can often send up a red flag or warning as to where things could be headed whether it’s positive or negative.
In my prior post titled “Area Real Estate Sales Slows in May” I provided some statistics that clearly showed MLS® real estate activity in our region during the month of May was below the level we had experienced in April. One month can never be interpreted as the start of a trend but at the same time statistical data can’t be ignored and if nothing else it creates the need to dig a little further. May sales this year were well above May of last year but we were under significantly different circumstances back then due to the arrival of COVID 19 which resulted in substantially less real estate activity in March, April and May of 2020 until things started to pick back up early last summer.
Our MLS® System provides a wealth of data provided you know where to look and interpret what the numbers are saying. Over the past week or two I have noticed that “price reductions” for properties listed for sale on our MLS® System have started to appear quite regularly. This in itself is a new trend as over the past year or more price reductions were all but absent. Prices were in fact trending up not down. Real estate sales were at both record levels and for record prices driven by strong buyer demand, low mortgage rates and a lack of housing inventory listed for sale. Prices were further driven upwards by the frequency of multiple offers where no matter how high the asking price was, there seemed to be an limitless number of buyers willing to pay full price and more, much more. Multiple offers while still present are much less frequent that just a month or two ago and while the number of multiple offers appears to be declining, price reductions are on the increase.
As of this post, there have been 22 price reductions on our local MLS® System over the past seven days. On the low end, a house listed for sale in Meaford at $279,900 was lowered to $269,000, a reduction of $10,900 or 3.9%. At the other end of the spectrum a rural property in Clearview Township listed at $1,700,000 was reduced to $1,529,000, that’s a decrease of $171,000 or 10% and the property had already been reduced previously by $200,000. We haven’t seen this kind of price reduction activity in over a year. Previously it appeared as there was no such thing as “asking too much” but looking at today’s price reduction data and overall level of market activity something has clearly changed.
I have been saying for months that the robust market conditions we have seen in the past year or more wasn’t sustainable over the long term. I don’t profess to be the smartest guy but I do take great steps to be informed. As professional real estate practitioners we owe “duty of care” to our valued clients and I for one believe that includes obtaining and sharing information such as this in order to help you make informed decisions. For months I have been telling my house buying clients including my own kids to wait as I am confident that in doing so a better deal is to be had down the road. Am I right? Only time will tell but based on what I have shared herein I believe the days of a more balanced real estate market has arrived and the market is shifting away from one where the Sellers are driving the train and Buyers and merely along for the ride.
Some in our profession feel our market will continue to perform as it is largely driven by the area’s desirable nature and amenities. There is no question that Collingwood and the southern Georgian Bay region is a nice place to live but we do not hold a monopoly on that. In reality and as one of my clients a local resident said, “there are plenty of nice places to live.” Just like the Greater Toronto Area and in other markets across the country, residential house prices in the area have gotten out of hand and beyond the reach of many. I am aware of one local company that recently hired a new staff member from outside the area. Upon investigating the local real estate market and home prices the person backed out of accepting the position allegedly stating “I couldn’t afford to purchase a home here based on what the job pays.” That in itself speaks volumes.
On many fronts including real estate it will be interesting to see what transpires in the next few months and beyond. Not just locally but globally we are in very different circumstances brought on by the COVID 19 pandemic unlike any of us have ever experienced before. How quickly we dig ourselves out of this situation financially, emotionally and otherwise is up for debate but there is no question it may take some time for consumer confidence and the lifestyle we enjoyed pre-pandemic to be restored. Change is clearly afoot and from a real estate perspective I will endeavour to keep you posted of what’s happening on a weekly basis moving forward.