Lowest number of sales in a first quarter in 9 years!
As expected, March 2023 results paled by comparison versus those of the market peak in 2022, with the number of sales transactions again down almost 40% and prices down over $140,000 (-17%) for residential properties sold and $60,735 (-13%) for the average condo. In 2023 is takes approximately 3 times longer to sell a property than it did a year ago. Cumulative days on market is 58 days (vs 18 last year) for a residential property and 62 days vs 23 for a condo.
By the number of sales during the first quarter, this is the worst sales year in 9 years, since the dark days of the Harper Conservative government. You have to go all the way back to the first quarter of 2014 to find a period with a slower number of sales and that only marginally so. (2,645 sales in Q1 2014 vs 2,651 in 2023)
Glass half full?
On the plus side, prices have been fairly stable for the last 60-90 days and remain trading very similar to prices in early 2021.
The Bank of Canada did not hike the central bank rate in March and mortgage rates have actually decreased slightly in recent weeks (though it is not unusual for Bank competition to do this, leading in to the peak selling season of April-June)
The sales to new listings ratio in recent months continues to show a solid “balanced” market which typically favours neither buyers nor sellers.
Corporate realtors, association groups and the most heard or seen marketeer Realtors, all point to an ongoing supply issue and an inevitable return to an unbalanced sellers’ market with limited supply. Hence, “buy the dip” tends to be the suggestion, as this new sellers' market is happening any day...so buy or list soon! Though there may be reason to believe we may continue to have a supply shortage relative to immigration, household formations and population growth, it remains to be seen how soon that manifests itself in to a return to surging growth in the number of sales. (and we have a long way to surge, to get back to a more normal level of sales)
Has the market “turned”?
There is clearly a sense that market activity is “picking up” that buyers have now “normalized” the higher mortgage rates, that the Bank of Canada rate pause is helping get buyers “off the sidelines” and that all will soon be well with the good ship real estate. The return of (some) multiple offer activity is also often referenced.
It is certainly true that “activity” is picking up, as normally does every spring, what remains to be seen is the relative level of growth in sales levels, which would be indicative of an improving market.
Unfortunately, the level of new listings is below both last year (by 21%) and the 5 year average (-15.6%) so it is difficult to see significantly higher sales levels, without accompanying volume of new listings.
On hand inventory level has improved vastly, compared to last year’s ultra-low numbers and was almost double at the end of March 2023 vs 2022. We believe that many current homeowners remain on the sidelines that might otherwise consider a sale, due to mortgage rates and overall price levels.
Starting last spring , builders have had a tough time and “sales fell off a cliff” (we believe by 60% or more, based on some reports) and typical list prices now are approximately $75-$100K (or more!) off last year’s price. Other inducements have also been added and buyer activity also seems to be “turning the corner”. Most builders have some pockets with good inventory levels of quick occupancy homes that buyers can consider, so that is a plus for buyers.
Both buyers and sellers in this market will want to check their expectations and not sabotage their chances of getting a deal done (or a lengthy search or listing period)
We see in many cases that sellers are stuck believing in 2022 selling prices and some buyers have adopted an overly aggressive approach to negotiating a purchase price.
So it is a good idea for sellers to assess whether they would want to sell at 10% or 15% lower than what they thought might have been the case last year. Also, researching sales prices in their specific area in 2021 might also give an indication of what to expect from the current market.
Gord McCormick, Broker of Record
Oasis Realty Brokerage 613-435-4692 or 613-371-9691