I have used the word “unpredictable” a few times over the past number of months, yet it is still a word that fairly accurately describes the Centre Wellington & area real estate market as we head into March.
Overall sales activity remained muted in February, although picked up over January.
New listing activity remained lower than predicted, which for now has continued to put a floor under pricing – at least in the $800,000 and under price category.
Lack of new listing activity has made certain parts of the market more competitive, resulting in a few higher selling prices than expected on a handful of listings. A sign that we are nearing the bottom of pricing … or just a blip? Too early to tell.
Pricing will be largely determined by inventory levels moving forward. If we see an oversized rush of new listings as we go into the spring market, downward pressure on pricing will continue.
Larger markets around us like Guelph and Kitchener – Waterloo are always leading indicators of what we might expect in our market. And in those two markets, we have definitely seen a return of the holding offers marketing strategy and many homes selling over ask with multiple offers.
For clarification, this does not mean a return to crazy prices. List prices are generally artificially low below market value to attract offers. And there are enough buyers willing to compete with each other. In other words, there is strong buyer activity in those markets.
We have seen a few multiple offer scenarios in Centre Wellington, but not enough buyer activity overall to suggest a trend is starting here – yet.
To a great degree, affordability is driving the market, with homes priced under $800,000 constituting more of the market – as that is the maximum price point many buyers can qualify for at current interest rates. And a larger market (like KW) has more homes for sale in this price category.
Frankly, Centre Wellington needs more homes in the $800,000 and less price category. If you have a home in this price category and are thinking of selling, now may be the time to consider putting it on the market.
As mentioned last month, the over $ 1 million price point in Centre Wellington and area remains challenging. As I write this article in the last week of February, we have only had 5 sales over this price point (fun fact: we sold 3 of them).
Affordability is part of the issue here, but even the buyers who can afford $1 million+ homes are being cautious and aren’t in a rush to make offers – perhaps thinking this part of the market will see further downward price adjustments before the market hits bottom.
One reality is some of the markets around us have already seen larger downward price adjustments in this price category compared to Centre Wellington, and buyers may be opting to purchase elsewhere.
One thing I can say is buyers, especially in this price category, are increasingly picky – expecting updates to be done – as opposed to buying anything regardless of condition a year or so ago.
Suffice to say, there continues to be somewhat of a disconnect between buyers and sellers when it comes to price in the $ 1 million + part of the market. Having said that, I do forecast higher activity in the over $1 million category moving forward.
The prime spring market is just around the corner, and I am expecting a more robust market as we enter the last half of March. In fact, I am predicting we will see more sales in the final 9 months of 2023 compared to 2022.
And while I am forecasting more activity, this does not automatically mean higher prices. Several homes currently on the market will still need to make downward price adjustments to sell. As I touched on above, inventory levels will largely dictate where the market and pricing goes from here.
But I believe the market will normalize as we proceed through 2023, as buyer and seller expectations (and realtor’s) more closely align – leading to higher sales activity. There are many buyers wanting to buy. We all just have to get on the same page from a value standpoint.
Sellers – who you hire as a realtor in this market matters. Negotiating skills & marketing approach are key – and could make the difference between your home selling… or not selling.
Until next month, take care.