July Market Report

It's fairly clear that there has been a lot of changes in the world in the past few months, as war rages in Ukraine, inflation is at 40+ year highs causing central banks to raise interest rates to quell demand, a Crypto crash, Investment Portfolios losing footing with a decline in the markets, and employees start going back to work in the office after the pandemic pushed many online, or into new careers altogether. But you're likely reading this for my insight into the local real estate market, and want to make sense of what is happening and what we expect things to look like in the coming months.

Well, needless to say, my crystal ball is a little foggy with all the recent financial and political news, but the numbers that the Toronto Real Estate Board has been giving us indicates to me that there is still uncertainty as to which direction things are going.

Here is a run down of the Newmarket Real Estate market highlights for the end of June 2022 (Q2):

Active Listings: 170
# of Sales: 95
# YTD Sales: 697
Months of Inventory (active/sales): 1.79
Average Sale Price: $1,143,875 (-$300k from February 2022 Peak/ -21%)
Yr/Yr Avg$ change: $55,208 (+5%)
Median Sale Price: $1,090,000 (-$290,000 from Feb 2022 Peak)
Yr/Yr Median$ change: $67,000

I had previously anticipated a surge of listing inventory, but it just has not come, which I believe is helping to prop up prices right now. We had fewer homes on the market at the end of June than we did at the end of May, and Inventory of GOOD HOMES is still very scarce. Much of the inventory that is sitting on the market right now, or at least has been for more than 2 weeks, would be homes that may be considered overpriced or lack features/locations that Buyers are looking for. Buyers who have waited out the market this long are willing to wait a little longer for the right house/location.

Volume of sales is another surprising factor (kind of), as there was only 95 homes reported sold in June 2022, the lowest sales figure since January, and 77 fewer sales than June 2021, and 25 fewer than June 2020. In fact, this was the lowest number of sales reported in the month of June dating back to June 2000, when there was only 94 sales posted. Another interesting data point is that June 2018 there was 128 Sales reported. 2018 as a whole year had the lowest annual number of sales (1115 for the whole year) dating back to 2001. By the end of June 2018 there was 547 sales for the year, as opposed to 697 sales at the end of June 2022, which mostly has to do with the high volume of sales in Feb/Mar this year.

Now it's pretty clear that the rising interest rates have a lot to do with this lower level of sales volume, as home buyers who were qualified in February can no longer qualify for the same mortgage amount, and when you couple that with a falling stock market, and shrinking portfolios, some buyers just don't have the same downpayment they did 3 months ago.

Even-though the sales volume for the month was historically low, because of the low inventory levels, the "Month's of Inventory" (MOI) remains relatively balanced @ 1.79. This is actually the highest MOI since June 2020, which was when we really started to see the Pandemic real estate boom begin, but nothing close to what we had in 2017 & 2018 when MOI was between 3.5 - 5.4.

It's important to note that while the Average and Median Prices are down significantly from the peak in February, prices are still up around 5% from the same time last year, and the month over month decline in prices has slowed significantly from, and the previous 3 months following February. I believe that this is largely due to the continued lack of inventory and a relatively low MOI. after the 2017 bubble, we saw inventory increase significantly, going from 188 active listings at the end of March 2017, to 452 only 2 months later and a sustained high level of inventory carried on into 2019, when prices started to march back up.

So what does this all mean?
Unless inventory doubles where it is now, prices should remain fairly steady and I do not expect a major "CRASH", as some nay-sayers might want to push out, but I do believe it's inevitable to see inventory start to pick up, and anticipate between 250-280 homes active on the market by the end of the summer. But it's unclear how much this will move prices, especially in the sub $1.2m price bracket. Homes in the higher end will likely see more drastic adjustments, especially homes listed over $2m (in Newmarket at least) as they are currently 18 homes listed over $2m (representing 10.5% of all homes listed), and 51 homes listed over $1.5m, representing 30% of all active listings, while there was only 5 sales over $2m (representing 5.26% of all homes sold), and 11 sales over $1.5m, representing 11% of the total sales.

SELLERS:
1. if you're selling your home, be prepared that it may take a little longer than your neighbours homes did that sold last year, but if you take the time to ensure it's presented well, priced right and stands out for the RIGHT REASONS against the other homes listed, than you should be confident in a sale. Staging is going to be ever more important, and so is professional photography. Buyers will likely be first introduced to your home online, and if the photos suck... they will move on, or think there may be a chance to get a "deal".
2. If you are stuck on getting a certain price for your home, you should list your home before considering buying your next home. If prices continue on the current trend, you could see a sale and then be in a strong position to negotiate your purchase! However, be prepared to move quickly... and keep in mind that the rental market is still crazy.. especially as some buyers are not qualifying anymore

BUYERS:
1. Make offers! Don't be shy. It's not uncommon to see properties selling well under the asking price, even when in multiple offers.
2. Make sure you have your financing locked in, if you need it.
3. Have your deposit liquid, and move quickly.

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