OK, I’m calling it. It seems safe to say that after the performance of the market in this past quarter, we can state that a market correction is well underway. For the 11th month in a row, single-family home sales in Southern Georgian Bay have been below 2017 levels are now more comparable to levels we saw in 2009-2011 when the market had more balanced conditions. I think this is a good thing.
We are coming off the end of an inflated market that reached a fever pitch through 2016 to mid-2017 and very slowly moderated over the course of this year. It would appear that the new mortgage stress-test rules introduced earlier this year, combined with several interest rate hikes through 2018, have done their intended job of cooling the market.
Single Family Homes
For the 11th month in a row, sales fell below monthly levels seen in 2017. Year-to-date, there have been 1317 single family home sales compared to 1734 at this time last year; down a significant 24%. Despite this, sale prices have continued to climb with a YTD average in our region of $531,728 ($455,000 median); up 4.3% from last year and 56% from five years ago!
For three months in a row, sales have been down monthly compared to 2017 and are now also comparable to levels we saw in 2009-2011. Average sale prices have continued to climb even more than single-family homes. As of the end of November 2018, the average sale price of a condo in our region was $384,752 (median $350,000); an increase of 7.4% over 2017 and 70% more than five years ago.Listings
Listings continue to be well below levels seen in 10+ years with a total of 2343 single family homes and 600 condos listed in our region so far in 2018. There were 768 active residential listings in the region as of the end of November.
As our area has a number of new subdivisions under construction, it would be noteworthy to say that the above sales figures do not include new home sales which I believe have played a significant factor in the marketplace. While there is no easy way to track them, it wouldn’t be surprised if they picked up much of the slack in the resale market this year.
What Is Going On?
11% of all sales in our area in November sold over their asking prices and others had bidding wars as well but sold at or below asking. This fact combined with still rising prices suggests that demand is still reasonable in our market. People want to live in this area and have great confidence in the future. Having said that, I also think the average person may not yet have come to terms with the idea that the market is slowing somewhat. Regardless, there is no panic or market crisis underway. Buyers now have the opportunity to take more time to consider their options and to have conditions and terms in offers. Sellers need to stay sharp on pricing and presentation.
Anecdotally, we are also seeing many conditionally sold properties come back on the market largely due to a buyer not being able to secure financing. It has certainly become more difficult than it was a year ago and buyers’ are well advised to secure pre-approvals before starting a house hunt.