To our dear clients, friends, and family,
We hope your summer is off to a great start! For us, Canada Day marks the beginning of summer and the start of the summer real estate market. The summer real estate market is usually quiet because the weather is hot, the kids are out of school, and cottage season is in full swing.
This year has been very difficult for anyone trying to predict the real estate market. If you remember back to January and February, we saw a significant increase in the volume of sales. January saw a 36.2% increase year-over-year, while February saw 17.2%. However, since March, we’ve seen a drop in sales year-over-year. This past June saw a 16.4% drop in sales as well.
If you remember back in 2023, we saw a significant build-up of inventory in September and October. The average months of inventory peaked at over 4 months (higher than it is right now), and with winter on the horizon, many people expected the market to take a turn. The average home price did soften from October through January. But January saw a significant resurgence in interest, with many buyers jumping into the market early. These buyers were probably anticipating a heated spring market. We did have a heated spring market, but it was very short, and it peaked in April.
It’s easy to look back and reflect on the market after the fact, but many of us want to know what is in store for the rest of the year. We think there is opportunity in this market.
Working with buyers and sellers daily, we think the rate cut did two things: it excited sellers with the prospect of a market uptick, and it showed buyers that the rates are starting to move down. However, sellers overestimated the speed and impact a single rate cut would have on our market. It took significant rate increases and 27 months to pause our market, so it’ll take more than one rate drop and a few weeks to kickstart our market once again.
The latest forecasts from our major banks (TD, RBC, Scotia, CIBC, and BMO) show rates potentially dropping from 4.75% to 4-4.25% by the end of the year. To us, this would make a meaningful difference for buyers. With current interest rates and the stress test, any drop in interest rates will give buyers a higher pre-approval amount and more buying power. With their newfound buying power and increase in inventory, we think many buyers will take the plunge before the end of the year.
Market Stats:
All Home Types:
Sales: 6,213 (down 16.4% year-over-year)
Average sales price: $1,162,167 (down 1.6% year-over-year)
New Listings: 17,964 (up 12.3% year-over-year)
Active Listings: 23,613 (up 67.4% year-over-year)
Months of Inventory: 3.8 (up from 1.9 in June 2023)
Now, comparing detached homes to condos is where we really see the shift in our market…
Detached Homes:
Sales: 2,988 (down 11.5% year-over-year)
Average sale price: $1,480,399 (down 3.3% year-over-year)
New Listings: 8,136 (up 9.6% year-over-year)
Active Listings: 10,130 (up 56% year-over-year)
Months of Inventory: 3.39 (up from 1.9 in June 2023)
Condo Apartments:
Sales: 1,520 (down 28.1% year-over-year)
Average sale price: $727,861 (down 1.5% year-over-year)
New Listings: 5,520 (up 21% year-over-year)
Active Listings: 8,806 (up 84% year-over-year)
Months of Inventory: 5.7 (up from 2.2 in June 2023)
Our current list-price-to-sales-price ratio is 100%, and the average days on the market before selling is only 20 days. That is very interesting, considering the volume of active listings.
This tells us a few things:
– Buyers are still buying, but they are picking the best homes in their price range.
– Serious sellers are pricing close to market value and are likely getting it.
– Sellers who price their home well can sell within 3 weeks.
– There is a large cohort of sellers who are struggling to sell their homes, especially in the condo sector.
For the rest of the year, we think buyers will continue to be very price-sensitive. If you’re looking to sell, it’s important to price your home fairly. This is a market where unrealistic prices will ultimately hurt the final sale of your home. If you’re looking to buy, many sellers are willing to make a fair deal today. This is especially true in our condo market, where many investors are out-of-pocket every month since interest rates hit record highs.
If you have any questions about the market in your area, please don’t hesitate to reach out!
Wishing you a great July!
Christo and Janette
