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

It’s human nature to seek out certainty in uncertain times. So its little wonder almost every single one of my clients are asking me, “what’s happening in the market”. Even after studying market trends for the past 37 years, I can honestly say this is one of the most difficult markets to predict. The reason its so difficult is because there are so many exterior forces that are affecting the direction the market can take. These include both grass roots fundamentals as well as major world events.

Vince Lombardi, who at the time was the most successful coach in NFL history was famous for having a talk with his players on the first day of training camp. The players he was addressing were the Super Bowl champions from the previous year. He would start off the talk with “gentlemen, this is a football”. The message was clear, it’s back to fundamentals. So let’s talk about the fundamentals. 

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Since January of this year, there has been a steady increase in the number of sales in the GTA. The number of sales is higher year over year, but that’s not saying much given last winter’s real estate bust. However, this year’s sales are still considerably lower than it was during the same period of 2021, when real estate was booming.

As for the number of listings, well, this is where the issue lies. January through April saw a steady increase on the number of listings, but not nearly enough to keep up with demand. May however has seen a significant rise over April which is good news for buyers.

The all-important chart is of course the SNLR chart. It has seen a steady rise since January in the percentage of properties that are being sold. From a low of 40% in January, (buyers market) to 68% in April, (seller’s market) which is exactly why the market has been experiencing offer dates, multiple offers, and sale prices well above asking. Nevertheless, May has shown a slight decline back down to 60%, albeit still a sellers market.

As a result of all this bizarreness in the face of the Bank of Canada hinting towards higher interest rates, there has been a steady increase in average selling prices from slightly over 1 Million dollars in January to just slightly below 1.2 Million dollars in May. That’s a 15% increase in the past 5 months.

Notwithstanding the ongoing war in the Ukraine, the BRICS nations becoming more of a reality, inflation remaining stubborn, the GDP coming in with higher numbers than expected, the labour market becoming tighter and tighter, unemployment dropping, the one factor that most buyers of real estate are concerned about now are the interest rates. The Bank of Canada just raised interest rates by .25%. This will affect the variable rate, but it WILL HAVE VERY LITTLE EFFECT ON THE 1 – 5 YEAR FIXED RATES.

Overall, the market will remain fairly robust simply because the supply is low and there is still a healthy demand for real estate.

If you are planning on buying or selling real estate in the next few months, feel free to consult with us first as there are very specific strategies we can employ in this market to leverage it in your favour.

Ken Wilder BA, ABR, CH