March 03, 2023

Spring Real Estate Conditions - Issue 350

If today’s weather is an indication of what March is going to be like, then I suspect the March Real Estate Market is going to be as tumultuous this year as it was last year.

Or will it? Stay tuned for that revelation.

The February numbers are out and let’s just say they are headed in the right direction.

It’s no surprise that the number of homes sold this February is down from the previous year. 2021 and 2022 sales numbers and prices set “storm of the century” levels that none of us will likely see in our lifetimes again.

All four cities in the region are down double digits with Kitchener down 52.3% in the number of sales recorded year over year. The trend however, is heading in the right direction with February sales outperforming January considerably. Usually February is marginally ahead of January.

The median sales price for the region, as expected, is down, ranging from -18.8% in Guelph to-26.3% in Kitchener. These figures might look ominous, but when taken in context with the past 10 years, anyone having bought prior to Covid is still in positive equity gain territory. More importantly, prices are looking to be back on the long term trend line.

The next few charts illustrate where this story starts to get interesting and in my opinion leads to the opportunities in the market place as I see it.

New Listings have echoed the sales numbers and across the region are down 28.6% in Cambridge to -45.7% in Kitchener. Guelph is down 32.4% and Waterloo is down 34.5%.

Sales have slowed considerably because of the time of year, higher interest rates, and buyers sitting on the sideline watching. The expectation was inventory levels and the number of homes for sale would have started to accumulate and rebuild to healthy levels. This hasn’t been the case, and in fact, the number of homes available for sale has been declining since 2016 and really haven’t recovered since then.

The number of homes available for sale in Guelph this past February was only 75% of what was available February of 2016. The population of Guelph during that time period has increased significantly so you can see how we were going to have issues with our market even before the pandemic disruption.

The story that’s being sold now is that the real estate market is in the toilet and nobody in their right mind would be in the market right now.

Is that accurate?

The demographics and the growth in the region would suggest that’s not the case.

Demographically, we have the second largest group coming into their peak earning and buying years, located in a region with strong economic growth and conditions. Demand might have backed off from the FOMO driven peak of the pandemic, but there is still strong demand for homes in this area. That’s not likely to diminish anytime soon.

New construction and development will help feed the demand. That will take at least 5 years even if the various levels of government improve the approval process.

What I see happening here is that with normal life - families growing, new jobs, deaths, and divorce in other words - normal demand will see our sales numbers rebound before the end of the year. The opportunity is for those people considering selling their home in the next 12-24 months. The opportunity is to sell while prices are still relatively high and there is strong demand in the marketplace.

I listen to my team comment daily on how they have a list of buyers, well qualified buyers, ready to go - and yet, they don’t have enough homes to look at or consider.

I have two requests to ask of our readers.

We are looking for properties to sell. If you are considering selling in the next 12-24 months, give us a call. If you have been following our weekly postings for the past 7 years you know we are seeing and sharing the big picture without the hype and BS.

The second ask:

If you like what we post and it makes sense, share this article with friends and family. We'd love to keep growing our subscribers and be your source for real estate education.

Thanks for reading & enjoy the weekend.

Paul

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