Welcome back to our monthly update on the state of the real estate market.

What a winter it has been. Banks have gone bankrupt, a past president has been indicted, the war in the Ukraine lingers on, Finland has joined NATO, (a neighbouring country to Russia), Saudi Arabia has announced its intention to join the BRICS nations along with several other countries, on April 12th the Bank of Canada is set to announce what they intend to do with interest rates, and Justin Trudeau’s budget confirms his utter disconnect with realty.

Here’s the interesting thing. With all this uncertainty, threat of war and recession rumors abound, the real estate market has now had 2 very strong months in a row. There was a 42% increase in the number of homes sold in March compared to February’s numbers. The increase in the number of new listings jumped by 47% to 11,000 in March. And for the second month in a row, there was a rise in the average sale price of all homes on the Toronto Real Estate Board’s monthly reporting, albeit very slight.

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As inspiring as those stats are, if you have been following my reports for any length of time, you know that the all-important statistic in predicting the market, at least over the short term, is what we know to be the “Sales to New Listing Ratio”. This can otherwise be referred to as the supply and demand chart. It compares the number of new listings in a given month versus the number of sales in that same period, expressed as a percentage.  As a reference point, April through November of last year, the SNLR hovered around 40%, what is officially known as a “Buyers Market”. For the second month in a row, there has been an increase in this metric. The SNLR now sits at 64%, officially a “seller’s market”. Yes, you read that correctly. When the SNLR ratio reaches or surpasses 60%, it is considered a “seller’s market”.

Inflation rates so far in 2023 fell in January and February to 5.9% and 5.2% respectively. This far exceeded expectations. I’m guessing that when the numbers are disclosed for March, we are going to see yet a further decline in inflation. Thus, contrary to my prediction 3 months ago, the BOC will not be raising interest rates again any time soon, and in fact, may even lower them.

If you’re going to take anything away from this monthly report, pay heed to this; when interest rates drop, and they very likely will sometime in 2023, all hell is going to break loose in the real estate market. I can say that with a fair amount of certainty because of two factors. Firstly, there is a significant deficit in the number of homes on the market which will take months to recover from. And secondly, there continues to build a huge pent-up demand for real estate as a result of the massive number of would-be buyers who have chosen to sit on the sidelines for the past 13 months.

WHEN INTEREST RATES DROP, WE ARE GOING TO SEE MULTIPLE OFFEERS, AND SALE PRICES EXCEEDING THE ASKING PRICES……. If there ever was a time to buy, it is NOW!! If you wait for rates to drop, you will be too late and you will get caught in the feeding frenzy. If you are a seller, this is exactly what you want to hold on for. If you’re both a buyer and a seller, buy now, get as long a closing date as you can, and sell your home down the road. Please keep this report and pull it out in 6 months. If you follow this suggestion, you will be in the small minority that took full advantage the market has awarded you.

Ken Wilder BA, ABR, CH