For the past 2 years, real estate activity across most markets in Canada have seen unprecedented growth. The market conditions we experienced were not only in record MLS® dollar volume and unit sales, it also included residential prices that approached stratospheric levels much of it fuelled by record low mortgage interest rates which led to multiple offers with Buyers paying prices well over the Seller’s asking price(s).
Luxury homes & condominium sales, those properties priced over $1 million played a dominant role in driving the demand for residential homes and condominiums across the southern Georgian Bay region. When sales for properties priced under $1 million were lagging 50% and more behind 2020 and 2021 levels, sales above $1 million remained strong reaching levels that we had never seen in prior years. The shift to a slower market began in March and has continued through to the end of September. Not only did this further impact the residential sales in the under $1 million price segments it also brought about a softening of the sales activity we had seen in the luxury home market through the later half of 2020, 2021 and the first two Quarters of 2022.
MLS® sales of luxury properties to the end of the 3rd Quarter 2022 of 451 properties are 26 fewer or 5% less than in the first 9 months of 2021.
NOTE: Areas covered in this report are Clearview Township, Collingwood, Grey Highlands, Municipality of Meaford, the Blue Mountains and Wasaga Beach.
These 451 sales which total $703.7 million are down $41.2 million or 6% from the same time last year. As mentioned above, most of this shortfall has taken place since March when the overall market started to decline and this trend has continued through to the end of September.
To the end of the 3rd QTR 2022 MLS® sales in the various luxury property price segments were as follows and shown in the chart below.
- Sales priced $1 to $1.499 million down 5% to 284 units.
- Sales between $1.5 to $1.999 million down 1% to 93 units.
- Sales between $2 to $2.499 million up 12% to 37 units.
- Sales between $2.5 to $2.999 million down 47% to 16 units.
- Sales over $3 Million up 23% to 21 units.
As the market continues to contract I suspect we will see these sales numbers decrease further in the months ahead stemming from a number of factors including higher mortgage lending rates, ongoing inflationary dynamics and the possibility of a recession .
NOTE: This includes Clearview Township, Collingwood, Grey Highlands, Municipality of Meaford, the Blue Mountains and Wasaga Beach.
The Blue Mountains remains the key location of choice for luxury home Buyers with almost 33% of the overall market for sales over $1 million. Many Buyers in the luxury segment prefer the Blue Mountains as it offers close proximity Blue Mountain Resort as well as to the area’s private ski and golf clubs. Notwithstanding that fact, the demand for higher end homes and condominiums in other municipalities have also increased with Collingwood now making up 26% of luxury property sales as seen in the charts below.
Based on MLS® sales though the 3rd quarter of 2022, the Blue Mountains has the highest “median” sale price for luxury properties sold at $1.659 million followed by the Clearview & Grey Highlands at $1.554 and $1.481 million respectively.
As of October 19, 2022 there were 279 properties listed for sale over $1 million on the MLS® System of the Lakelands Association of REALTORS®. As in other price segments of the market, listing activity has increased in the past 2 to 3 months with more properties appearing on the MLS® System. The reason for this can be many including Seller’s wishing to maximize their sale price and equity in this changing market, the impact higher mortgage interest rates may have on their longer range plans and finances come mortgage renewal time or perhaps their lifestyle and family needs have simply changed etc.
Based on the current rate of sales through the first 9 months of 2022, days of inventory are as follows in the various luxury property price segments. As reflected in the chart below, higher priced properties are taking longer to sell particularly over the $2.5 million threshold where days-on-market, the time it takes to sell is now well over a year.
It is worth noting that in a report published by U.S. real estate firm “Redfin”, based on their data luxury home sales in the U.S. June through August dropped 28% to the lowest level in 10 years surpassing the slump in sales that was brought on by the arrival of the COVID 19 pandemic.
In summary the sky is not falling nor has the market burst but as these statistics indicate, the real estate market today is not what it was in 2020, 2021 or even back in the spring of this year and the luxury property segment in no exception. Sellers looking to sell or Buyers that may be considering a purchase need to be keenly aware of where the market is today and where we may be headed based on inflation, rising interests rates and economic outlook both domestically and globally in the months ahead.
Luxury property prices and days-on-market can vary greatly across our region based on factors such as location, property size, water frontage & more. In my 21 years as a real estate Broker, Market Value Appraiser – Residential and as a certified luxury home marketing specialist, correctly pricing a property to sell has never been more important than it is today. If Sellers get themselves into a position where they are chasing the market down, repeatedly having to reduce their asking price to attract a Buyer and secure a sale, the only winners are going to be Buyers, those that are patiently waiting for prices to erode thus giving them better buying power and a stronger position from which to negotiate the best deal.
Contact Me to learn more or to discuss your luxury home sale or purchase: rcrouch@sothebysrealty.ca