I’m writing this article a little earlier than normal due to the magazine deadline this month, so I only have 17 days of sales data for April to analyze for my market update for this issue.
As I have been saying over the last few months, inventory levels will largely dictate where the market heads in the short term. And in that regard, lower than expected new listing activity (as opposed to old listings just being relisted) is definitely impacting the market.
For the first time in several months in the Centre Wellington market, the data is indicating noticeable price growth month over month, although of course we are still down significantly year over year.
Listing activity picked up in March, but lower listing activity during April (month to date) has resulted in higher selling prices than anticipated on some homes and condos as more buyers re-enter the market – but sellers have not (not yet anyway).
This has made the market more competitive, resulting in upward pressure on pricing (at least in the $800,000 and under price range). Over one million dollars, our market continues to be a little more challenging.
Of the 83 active listings in CW, 36 are priced at $1 million or higher. Many have been on the market for extended periods. There have only been 8 sales over $1 million in the last 30 days. This slower selling part of the market has resulted in overall inventory ticking up, which is counter to what is happening in other markets.
But as more confidence returns to the market (which appears to be starting to happen), the over $1 million market will start to come to life as well (some price adjustments will have to occur however).
Why has listing activity been slower than expected? Several reasons I suppose. Uncertainty in the market to date. Some sellers not wanting to sell into what they think is the bottom of the market.
Lack of new inventory means sellers don’t have a lot of places to consider moving to even if they wanted to. Sellers with existing mortgages in the 2% range really don’t want to move up to a bigger home with an overall mortgage rate closer to 5%.
As sellers start to see increased pricing and are more confident interest rates have reached their peak (in fact longer term rates have come down a bit), this may give them the impetus to make a move and list. And remember, when inventory is low, it is normally a good time to list.
But also remember, it is virtually impossible to perfectly time the market. My simple advice: sell when you are ready and when it makes sense for you. As I predicted at the outset of the year, I still expect higher sales activity in the last half of this year.
There are still risks in the market of course. Will this predicted recession arrive in 2023? Will unemployment spike up? Will inventory suddenly spike? All these things could put renewed downward pressure on pricing.
For now, there is definitely more buyer activity out there, suggesting perhaps the market has turned a corner.
Thinking of buying or selling? Give me a call anytime at 519-766-3716 for a no obligation discussion on your real estate needs.
Until next month, take care.