December 15th 2023
As we slide into the last few weeks of 2023 the market presents no real surprises. Prices in November are down on average about $12,362 or 1.8% from October. And that’s pretty consistent with what we’ve seen in past years for November, as the market runs out of steam approaching the Christmas season.
What you will see, as you look at the average sale price, municipality by municipality, across the region is that there is no consistent pattern. In fact, there are more municipalities registering price gains month over month than there are those with losses. However, the largest municipality in the region, St. Catharines, registered the largest average loss, $85,388 or 12.39% followed closely by Niagara-on-the-Lake with an average loss of $128,833 or 10.89%. However, it should also be noted that each of these two municipalities defied trends and showed substantial month over month gains the previous month.
And that serves to illustrate the point that the market continues to be quite unstable with no uniform pattern emerging. And for the next month or so, moving through December and into the early days of January, as the Christmas season is upon us, followed by New Year celebrations, not much in the way of new trends will emerge.
I think it is safe to say, looking ahead into the new year, that consumers are looking for the market to speak. There is a continued feeling of interest in real estate. People want to buy and sell. In some cases however, a combination of high interest rates and the lingering stress test has priced some out of the market. This is especially true of first-time buyers. But for the most part, people, everyone from end users through speculators and to investors are looking for stability. Stability in price momentum. Stability in interest rates and stability in activity.
And speaking of activity, that is another indication that there continues to be pent up demand in the marketplace. As we have seen, traditionally unit sales drop substantially from October to November and then of course more so again on into December.
Last year 2022, there were 429 sales registered in October, followed by 359 units or 70 units fewer in November. A drop of 16.32%. This year, November’s sales figures totalled 374 units, down only 14 units or 3.61% from October.
If we take a look at that on a graph, we’ll see the slide has flattened out between October and November, and while November remains pretty lack luster, it is an improvement over last year.
Moving into 2024 what can we expect? More of the same? That depends. In the days and months ahead, the story is all going to centre around interest rates. Compared to the 2% and lower we enjoyed a couple of years ago, today’s rates of 6%+ are crippling. Especially hard hit are people renewing their mortgages right now. What I can say is this. The forecast over the next year is for an easing of interest rates. Possibly as early as the second quarter of 2024. That will make a huge difference. And now if the Feds would drop the stress test, in the light of easing rates, that would provide welcome relief for thousands. If you have a mortgage coming due, or in the process of acquiring a new home and a new mortgage opt for variable rate or short term. Relief is on the way! And it won’t take much of a drop in interest rates to make a huge difference in market activity, both in unit sales and in price. I believe that will be the story that unfolds in 2024.