The price of a typical home in Canada has increased 57% since 2020, according to BMO Capital Markets, as a historically low shortage of homes during the pandemic gave rise to intense competition and record-high sales prices.
Now, however, following a series of interest rate hikes by the Bank of Canada, price growth has begun to slow in many markets, with some cities, including Kitchener-Waterloo, London, and Toronto, recently posting price declines month-over-month.
The local real estate market set records in February of this year when 802 houses sold in the region for a median price of $958,206. In the months that followed a steady decline in prices has been experienced across the region, bringing the median sale price in June for a home in the Waterloo Region to $805,000. This number has remained steady over the past two months as has inventory, causing some to speculate as to whether we have achieved the “new normal”,
too soon to tell in our opinion.
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 and more consideration will be given to the current competition 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.
