For those of us in the real estate profession as well as consumers, it comes as no surprise that the 2023 real estate market is vastly different from the one we experienced in 2020, 2021 and in the 1st Quarter of 2022. As covered in my April Market Report, year-to-date MLS® sales around the southern Georgian Bay region are down 48% in terms of dollar volume and 38% in unit sales from one year ago and it would appear that this in unlikely to change in the near term.
During the latter part of 2020 and in 2021, record low interest rates help drive both housing demand and prices to levels that most of us had never seen. Further, you had to know that the robust market we saw during this period, with multiple offers generating robust property sales well over their respective asking prices and even their replacement costs, was neither sustainable nor healthy. Home ownership for many Canadians quickly became a fading dream and even for those that chose or had no choice but to rent versus buy, it was a bleak situation trying to find decent yet affordable rental housing.
With sales in both 2022 and year-to-date 2023 well off the heady pace we saw in 2020/2021, today’s real estate buyers and sellers need to know the facts in order to make rational decisions regarding their home buying or selling goals and objectives. As real estate professionals, our primary role must be in providing our clients with meaningful and quantified information with which to make rational and sound decision(s). Real estate purchasing need not be a nerve racking experience nor home ownership an unattainable dream. Over the long term real estate, which like anything has it’s ups and downs, has always proven itself to be a good investment if done wisely and based on facts. Don’t be mislead by vague media reports many of which tout rising “average” home prices. We as REALTORS® are required to follow a strict Code of Ethics which among other things prevents us from making disparaging remarks about our colleagues. That being said, my observations about the market conditions we experienced in 2020 and 2021 were in part caused by our own profession.
We have all saw For Sale signs that said “Coming Soon to Realtor.ca” with offers being held back or 5 or 7 days both of which were aimed at building hype and multiple offers driving sale prices well above the seller’s MLS® listed asking price. Homes that sold were then posted on social media sites such as Facebook boasting “sold over asking or sold in 2 days so happy for our sellers etc..” While some defended those tactics for me it raised the question “what about the poor buyers?” In many cases my experience suggested that some buyers may have bought more house than they needed or could ultimately afford if interest rates were to rise which they have or if we were to be faced with a recession which could still happen.
For those that know and or follow me I am a numbers guy and I regularly look at and post the key statistics affecting real estate sales and listing activity in our area. Besides satisfy my own interest, knowing and showing my clients what’s happening in the market is crucial to helping them in making informed decisions. While basic sales data such as the number of MLS® sales and dollar sales volume is great, it doesn’t always tell the whole story. As such the following are some key statistics that both sellers and buyers need to be aware of and I have compiled these to include a 5 year history from 2019 to 2023 showing both where we came from and where we are at year-to-date.
The chart below shows a 5 year history of the MLS® Median Residential Sale Prices in the area. They peaked in February 2022 at $967,500 and have trended downwards starting back in March of last year when the market started to turn. As recently as April the median price was $730,000 driven by a couple of factors. First and as previously mentioned, year-to-date 2023 sales are down 48% and 38% in terms of MLS® dollar and unit sales respectively. While sales between $500,000 to $800,000 in our area are up year over year, sales above $1 million are well below last year thereby reducing the median sale price significantly. Further, multiple offers have all by dried up in the area so most properties are not selling for over their asking prices.
As shown in the chart below, the MLS® Residential List-To-Sale Price Ratio has dropped significantly as most homes are no longer selling for over their respective MLS® listed asking prices as they did in 2021. For much of 2021 and into early 2022, the ratio was 100% or higher, again peaking in February of last year at 106.5% but declining steadily ever since.
Lastly, another key number to look at is the time it takes to sell a home, see the MLS® Residential Sales Days On Market in the chart below. In 2021 days on market, the time it took to sell a home ranged from a high of 13 days to as low as 7 days before increasing back to 13 days at year end. In the early months of 2022 days on market was 7 or 8 days before rising steadily through the year ending at 44 days which is essentially 1.5 months. In February of this year we saw a dip to 26 days but days on market has for the most part remained above 40 days after starting the year in January at 60.
For the balance of the year, I forecast that these number are unlikely to change. As MLS® sales activity overall remains much softer and especially for residential properties priced $800,000 and above, there is simply no compelling reason for anyone to expect a return to the market heydays we saw in 2021. Inflation is still a factor and more importantly, increased interest and mortgage rates overall are going to curb sales and pricing into the forseeable future.
Portions of the Greater Toronto Area (GTA) continue to see multiple offers with properties selling for over their asking prices. Speaking with real estate colleagues in the GTA, inventory of homes listed for sale on the MLS® System remain low. Such is not the case in our market area. As of this post, in the six municipalities referenced in the charts above, there are currently 758 active residential listings up 41% from 546 this time in 2022 and 104% higher than 376 active MLS® listings back in 2021.
With year-to-date MLS® sales and prices down while days on market and the number of MLS® listings are up, there are clearly fewer buyers right now. Nonetheless, even in a shifting market, sellers and buyers that are provided with relevant and quantified information can make informed decisions regarding their real estate needs thereby allowing them to navigate successfully through these changing times.
A listing of my own priced at $1.1 million conditionally sold after just three showings in less than a week. After looking at several homes for sale, we are in the process of securing my seller clients a replacement home to purchase and at a fair price. With the key information I have provided them, it will be a win win on both sides. Using my knowledge and expertise, I can help you achieve the same results.