As I am writing this article ahead of the September 1st deadline for the Booster, it is a time when even I have more questions than answers when it comes to the real estate market.
Summer is always a somewhat slower time of year for real estate sales, and this year has been no exception. In fact, I think it is safe to say it was slower than average from both a new listing and sales standpoint (both resale and new construction) in July and August.
I am not going to go on and on about the many reasons why – as you have already been reading and hearing lots about the interest rate increases and the way the market over heated in the first 3 months of the year. My time and energy are now spent on looking for hints on where the market is headed from here.
My crystal ball is no better than anyone else’s, but let’s just say I’m a little obsessive about going over the local data on a daily basis. Another interest rate increase is here – just about when you get this magazine in the mail, and we know overall inflation has started to decrease by a small amount, but there is so much more we do not know or do not have a good handle on.
Are we going to see more layoffs in the workforce, where are geopolitical issues headed, and when is the supply chain mess up ever going to get totally straightened out are just some of the many questions I have. And the answers to these questions will go a long way to determine if the real estate market is going to rebound a bit earlier in 2023 or not until the end of 2023 and into 2024. Business sentiment is trending negative at the moment.
On the ground, insufficient real estate sales activity in Centre Wellington continues to make it difficult to make too many data-based projections. Pricing in our area has definitely trended downward, but not at an alarming rate. Markets around us seem to have decreased by more than us so far, and various areas in the GTA are certainly seeing some very major adjustments from the highs they hit earlier this year.
That is one of the reasons we have seen a marked decrease in the number of buyers coming from the GTA. Based on what is happening around us, and given the additional rate increase, I see pricing in Centre Wellington continuing to decrease for the remainder of 2022.
Predicting 2023 is a lot trickier at the moment. Locally, the listing activity and sales activity we see over the next 60 days will give us many more hints and data as to where we are headed going into 2023. While listing activity has been slow over the past 60 days, I have been giving a lot of home valuations over the past couple weeks, so I know many local home sellers are thinking of selling.
Several of these people are thinking about moving out of area. Having said that, in a market dominated by GTA buyers earlier this year, I am seeing a lot more local people looking to buy as well – both current homeowners wanting to move into a new home but stay in the area and local first-time buyers. Many local people were shut out of the market during the frenzy earlier in the year.
While I have not seen any evidence to date that we are going to see much in the way of significant distressed sales in our market (i.e fire sales), pricing is starting to look more attractive for buyers on certain homes. So, while overall pricing may decrease more, there will be some good opportunities for buyers in the last few months of the year.
Remember, it’s impossible to time the market perfectly. And rates will continue to go up. So many buyers that have been temporarily on the sidelines should start to dip their toes back into the market. If your time horizon to hold a property is 5 years or more, there is little downside risk in jumping into the market now anyway. Keep in mind that in 2021 pricing softened a bit between March and September, only to take off in an upward direction in October. I’m not saying this is going to happen this year, but it’s always good to look at historical trends.
For sellers, my advice continues to be – use the right selling strategy and price properly to the current market conditions, and your home will sell at the best possible price in a reasonable timeframe. Average days on market before a home sells in our area is now around 31 days, and I expect that to increase a bit moving forward.
Homes seemed to sell regardless of condition in the first 3 months of 2022; now sellers may need to do more maintenance and updates to unlock the best value in their home in this market. But before you go spending money, have an experienced realtor tour your home and give you some advice to make sure you are investing in the areas that will give you the best return and sell your home more quickly. Curb appeal matters. And as always, staging is important in this day and age.
For an honest and straightforward conversation on your real estate needs, feel free to call me anytime at 519-766-3716.
Until next month, take care.