When it comes to real estate, the numbers tell a story.
A recent statistic points to some good news indeed. ‘Months of inventory’, a stat that looks at supply versus demand, has hit the one-month mark—for the first time in 11 months.
“We saw one month of inventory in April compared to .66 in March,” says Trish Lewis, Sales Representative, GoWylde Team/ReMax. That’s definitely an improvement, even though it takes six months of inventory to be considered a buyers’ market.
The average sale price for the month of April tells a similar story.
It went down 7% and is currently $943,478. The decrease occurred across all housing types: the average sale price of detached houses was down 7%, townhouses were down 6%, and condominiums down 3%.
There are other indications that the market is cooling. For instance, the number of listings going to multiple offers was 89%, down 7% from March. The number of properties sold in April was also down 14% from the previous month.
“Two main factors are contributing to the market cooling. The first is seasonality; more people list in the spring and the increased supply tends to cool down the market as we head into the summer months,” says Lewis.
“The second factor is that interest rates went up 50 basis points in April. According to the Bank of Canada, another 50 basis points hike in June is expected and the prime rate could continue to climb up to 3% before inflation is under control. Interest rates would then be north of 5%, which seems high relative to current rates but is normal.”
With higher interest rates, buyers will qualify for less of a mortgage.
The good news is that the number of homes on the market has increased. There are also currently 115 homes that have been on the market for more than nine days, which reduces the likelihood of them going to multiple offers.
Says Lewis, “There is more choice, and if you buy soon, you will be locking into a much better rate than you will be six months from now. Immigration will outpace new home builds for the next couple of years, which means you shouldn’t see significant price reductions.”
The bottom line is that sellers will have to be more patient in this market. They can’t expect their home to sell within seven days, they may not see multiple offers, and they may have to accept an offer with conditions.
That said, this is still very much a strong seller’s market, so it is indeed a good time to sell. If you are both selling and buying, this is a much easier market to do that in—you just have to use the right strategy for selling your home.
For more information, or to contact real estate agents Mary Wylde and Trish Lewis, visit the GoWylde Team or call 519-826-7109.