Expert advice, market reports, and tips from the Niagara Region real estate professionals.
This month marks the 2 ½ year mark since the robust real estate market of the covid era came to a halt, and what I’m going to call a real estate recession began. First with a steady erosion of prices over the balance of 2022 and a pretty rocky road since. This month also marks the third consecutive month where we have seen a 1/4 point cut in interest rates compliments of the Bank of Canada. So where does that leave us at this point?
As we watch the sales figures come in month by month and year by year, there are a couple of trends we need to keep in mind. The first is cyclical. What is happening seasonally? And the other is economic. What is happening overall due to market pressures brought about by interest rate fluctuations and inflationary changes?
To really understand the Canadian economy today especially as it is reflected in the Real Estate market, you need to travel back in time to the late 1970’s and early 1980’s. Two factors need to be analyzed. Inflation rates and interest.
At the start of every month, our real estate boards publish the sales stats for the previous month. It’s always interesting to see these figures and from them try to deduce where the market is going based on past and current performance.
Another month has come and gone. What exactly has happened in the real estate market across Niagara over that time? Nothing startling I’m afraid. As we’ll see, average sale prices and number of units sold, while both inching up aren’t really registering any significant change.
Opening up the Niagara Association of Realtors website, one of the things you are greeted with is a graph depicting market activity over the past year based on Median Sales Price. The current graph is surprising
Last newsletter we saw that the first month of the year started off a little stronger than where it had finished in December. A gain of $6,111 to be exact. Not a huge gain, but it at least reversed a six month slide in prices.
Looking back at market performance over the years, we see that while in rapidly appreciating markets like 2017, 2020 and 2021 it is not unusual to see prices continue to climb into December and January, that is not typically the case. In both declining markets and in stable balanced markets, we see prices decline at year end, and generally on into January as well. That pattern was seen in 2022-2023 and that is precisely what we are seeing again in 2023-2024.
As we slide into the last few weeks of 2023 the market presents no real surprises. Prices in November are down on average about $12,362 or 1.8% from October. And that’s pretty consistent with what we’ve seen in past years for November, as the market runs out of steam approaching the Christmas season.
The sales figures are in for the month of October and they really don’t contain a lot of surprises. In fact, the average sale price across the Region is almost exactly what it was last month, $673,383 in October compared to $673,674 in September. A drop of $288 or 0.04%. Negligible!
Last month when the sales figures came in for August, we were surprised to see a significant downward trend in prices across almost every sector of the region. In some cases, the drop in average sale price was huge. Niagara Falls down 9.80% for example, Fort Erie down 8.56%, Welland down 8.44% and so on. In just one month. But upon further investigation we saw that the actual apples to apples price drop was only around one percent. We saw that when we consulted the H.P.I. which compares the selling prices of similar properties rather than sales averages of all properties sold.
