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Expert advice, market reports, and tips from the Niagara Region real estate professionals.
I’m optimistic about the market for 2023 and beyond. You might wonder why looking at the sales figures for January. According to the numbers, we see that the average sale price across the Region came in at $627,561, which is a drop of $28,776 from December or 4.38%. That’s sizeable.
There was a period of time in late summer, and early fall, when it appeared that prices in Niagara had stabilized. August, September, and October showed average prices in the Region being $695,328, $695,205 and $691,041 respectively. That puts the average during that 3-month period consistent within about 1/2%. A statistically insignificant variation. But that changed again now at the end of the year. In November we saw prices fall by $13,074 or 1.99% to $677,967 and again in December with the average sale price in Niagara coming in at $656,337 we are seeing another single-month drop of $21,630 or 3.2%.
Last month we took a look at the fact that both here in Niagara and around the globe, economies are in turmoil. Inflation is running at a pace we haven’t seen in almost 40 years, and as a result, governments are scrambling to control it by raising interest rates. That situation hasn’t changed. In fact, even in the face of a possible recession next quarter, the Governor of the Bank of Canada has vowed to stay the course of interest rate hikes in order to combat inflation. We’ll see. So far that tactic hasn’t had much of an effect on run-away inflation, but it has definitely impacted the housing market.
The Fed’s are on a mission! They are waging an all-out war against inflation, and their weapon of choice is increased interest rates. It seems to be their hopes that by raising interest rates people will be reluctant to buy, or at least borrow and buy. Whether it has the desired effect on things like gasoline or appliances with the war in Ukraine still raging and shortages still lingering from COVID remains to be seen. One thing for sure. It is having a dampening effect on the Real Estate Market. That is evident both in the declining number of sales as well as the decline in average sale price.
I was thinking the other day of the first time I ever saw the movie ‘The Wizard of Oz’. I know I am really dating myself by saying this but it was actually at the movies. I remember at the time it started out in black and white and I remember thinking ‘what is this’. There were a few black and white movies floating around back then but I didn’t want to be paying to watch one. I still remember the impact it made when the house landed down with a thump and Dorothy opened the door. Splendid colour, munchkins, yellow brick road. What a change. Dorothy looks at her little dog and says ‘We’re not in Kansas anymore Toto.’
In life, I’m a lot of things. I’m a real estate salesman. I’m a Broker of Record. I’m a teacher. I’m an investor and an investment coach. But by formal training, I’m a mathematician. I have an honors degree in Mathematics from the University of Waterloo majoring in Combinatorics and Optimization. Statistical analysis. I sort of know my way around numbers and they speak to me. But the message derived is only as good as the data from which we draw. Each month the local Board provides us with statistical data to analyze. Two, in particular, we tend to focus on. The number of units sold, and the average sale price across the Niagara Region. In this article, I’ll provide you with an up-to-date snapshot of both. And let’s begin with unit sales. There is absolutely no question the volume of sales is significantly down. Down from last month and down from last year.
We talked last month about the fact that the market was changing. There were fewer buyers actively looking. Multiple offers were down. In some cases where sellers were delaying presentation for a few days in hopes of generating a ‘bidding war’, where once they might see 12-15 competing offers, now there might be 2 or 3 and in some cases none at all. Well, that trend is continuing through April and into May. If we look at the unit sales reported throughout Niagara, we see there were 758 sales in April. That is down 133 units or 14.93% from March. But what is more significant perhaps is that it is also down 375 units or 33.10% from April 2021. There are simply fewer buyers active in the marketplace.
Back in the early fall of 2021 after an incredible run up in prices over the first 8 or 9 months of the year, the average sale price for St. Catharines sat at $663,810 (end of September). We couldn’t help but wonder if after gaining $106,556 or 19.12% from the beginning of the year, if the average price could possibly cross the $700,000 threshold by year-end. It didn’t. Average price in St. Catharines ended the year 2021 at $670,075. Still a yearly increase of 20.25% but not quite $700,000. Who would have thought that just 2 months later, February 2022 the average price in St. Catharines would have crossed not only the $700,000 mark but the $800,000 as well, ending at $801,413.