Last month I noted that we were experiencing low home listing numbers and high demand. Normally this scenario would push prices up but, surprisingly, prior to this month prices were still trending downward. The stats do tend to lag and I suspect that was the case in February. It felt like the market was better but the numbers didn't reflect that. Now by the end of March, as the available homes for sale continued to be at record lows, we saw prices flip to an UPWARD trend. Recently we have had some of our listings sell for close to what they would have likely sold for at the peak. This was an unexpected improvement after last fall when there were some surprisingly low sale prices.
While the first quarter of 2023 has been pretty good for sellers due to the strong demand and low inventory, we are expecting a bit more cooling as more people list their homes and buyers have more choice. Hopefully some sellers will move forward to catch this wave of higher prices as there are a lot of buyers out there waiting to buy!
March 2023 housing numbers
In March we saw:
-sales were DOWN 42.5% from March 2022
-sales were 28.4% lower than the 10-year average for March
-the number of homes listed for sale was DOWN 35.5% when compared with March 2022
-the number of homes newly listed for sale was 22.3% below the 10-year average
-there were 8.1% more homes on the market at the end of March 2023 than there were in March 2022
-detached home sales were down 43.6% from March 2022
-the benchmark price down 9.5% when compared to March 2022; HOWEVER it was UP 1.8% when compared to a month earlier, February 2023
What does this all mean?
It is important to note with respect to the above, that we do not really know what is happening in the market. While sales volumes are down, this could be primarily due to the lack of listings-not a reflection of how the market would be if listing numbers were normal. If there is nothing for buyers to buy then of course the number of sales will be lower, even if there are a lot of buyers wanting to buy. Had there been normal listing numbers, there likely would have been much higher sales volumes.
Supply and demand definitely applies to real estate! In March we continued to have high demand and very low supply, resulting in the recent upswing in prices for sellers who have listed their homes. Buyers who had pulled out of the market last fall (due primarily to interest rate increases) seem to be back shopping. While many are now limited to a lower price point, they are at least willing to buy. We are seeing that the strongest sales seem to be at the lower price points but this is not unusual in a market as unaffordable as ours. Recently a large percentage of condos have sold with multiple offers in the first week-as they would have in the peak market. We have seen similar results for entry level detached houses. As we move up in price point, the frenzy subsides slightly.
For now, sellers are benefiting from the supply and demand dynamic. We don't know how long this will last but it will likely depend on when others start to list their homes and in what numbers. If inventory remains low and buyers remain interested, obviously sellers will do
well. If a large number of listings come onto the market then we will likely see a more buyer favourable situation.
What is the best strategy to obtain the highest price in an uncertain market?
Well it ISN'T cupcakes, charcuterie and social media (when was the last time you used Instagram to find a house?!). While these things are good for promoting realtors, they won't get you the best price for your house. The market has definitely changed and the strategy needs to too. Strong negotiation skills are more important than ever and knowing what is happening in our market (which is currently changing on an almost weekly basis!) is critical.
As always, I am happy to discuss your individual circumstances. Everyone's location, type of home and personal situation needs to be considered for real estate planning. If you have friends or family struggling with what to do in this
market, please tell them to call me to discuss. Advice is free-you/they need not be currently buying or selling. There are few things I like to do more than discuss real estate!
