Homebuyers hoping for a boost in housing supply recently got their wish, as a wave of new listings hit the market.
This increase in the number of properties available for sale is typical of the month of April, commonly referred to as the ‘Spring Market’. During these months the number of homeowners putting up a for sale sign typically outpaces any other quarter of the year. This April was no exception, with the number of newly listed properties increasing 12% on a month over-month basis, in fact 2022 posted 10% more new listings than April of 2021.
Of note however, is the divergence between the number of listings and the number of sales. If you chart these numbers to show market activity they typically follow a similar track on a line graph. In the busier months of the year the number of listings increase, so do the number of sales and as listings decline in slower periods of the year, the number of sales typically falls off as well. Over the past couple of months these lines have been trending in opposite directions. The number of listings is up significantly as sellers look to cash in on record high prices, but the number of overall sales is in decline. The result is increasing inventory levels, which in the Waterloo Region is now at its highest level since 2018.
This increase in supply is putting downward pressure on prices. The market set records in February of this year when 802 houses sold in the region for a median price of $958,206. That may prove to be the peak in coming months as March saw a 6% decline in median price followed by a further 5.5% decline in April setting the median sale price last month at $850,000.
While these changes are significant it is important to note that with our current 1.1 months of inventory we are still a ways off of a balanced market. Properties that are priced appropriately are still selling in days and many are still receiving multiple offers, though buyers are bringing forward increasingly less aggressive offers, many now including conditions. Sellers need to be cautious, with so many other options out there, buyers are more willing than they have been to walk away.
A prudent seller will put less weight on the factoring in of sold prices in their pricing strategy during market times like these. Relying on sold prices in a teetering or down trending market will have you chasing the bottom. In a declining market, the first home to reposition sells for more than those who follow. You need to be out in front.
If you are thinking about selling, don’t panic! Houses are still selling, lots of them. To be successful, look at what the competition is, have a better price or a better property and it doesn’t hurt to have some perspective. An 11% decline in the median sale price still has us well ahead of where prices were at the end of last year. So even if you bought your house last year, chances are at this point you have still done very well.
If a move has been on your mind, please reach out to us for a conversation, there are lots of factors to consider to get the timing correct these days, interest rate changes alone can make a significant difference in the overall cost of your home during the course of ownership.