I wanted to take some time to talk a little bit about what has been happening in the market over the past six months, from January to July. In January of this year, we witnessed peak pricing, potentially the highest pricing that we have ever seen to date. I am going to try and do my very best to summarize it all. If you take the previous three years, you would notice that every year there was a healthy increase in home appreciation at approximately 10-20% in growth. What we saw happen in December 2021 and January 2022 was a 20-30% increase in appreciation and growth, in just one month alone. In reality, we are seeing a correction in pricing from January, however, what is great is that appreciation is still higher than pre-covid days. So yes, you may witness pricing begin to decrease 10-20%, but it is important to remember that this is from January pricing, which I am sure we could all agree was simply not sustainable.
Based on the past six months, there is still very little need to panic. It is clear that a price correction is taking place, but there are still ample, eager buyers and sellers active in the market.
I touched a little bit on this in my last blog, but it is still worth mentioning again, that the market is continuing to level off and in doing so, becoming more of a balanced market every day. As a brief recap of what a buyer’s market means:
- Buyers can feel more comfortable including conditions
- Multiple competing offers are less common
- Sellers are still listing their homes at a reasonable price
Although pricing may no longer reflect January, it is still significantly higher than a year or two ago. We still have another couple of months of getting through product that is priced fairly high, no longer reflecting current market conditions. However, despite this, the market in the province remains very healthy with a surplus of immigration still expected and a shortage of product, the market will continue to thrive and this product will eventually sell.
When you look at the bigger picture, with the price correction and interest rates being where they are, you may potentially be in a similar situation as January when pricing was higher, but interest rates were lower. Today we are seeing more balanced pricing with higher interest rates. This may be something worth examining a little deeper before jumping on a property like you may have previously needed to. This may be a great time to consider alternate opportunities, perhaps, condominium living, a multi-family income-generating property, a semi-detached home, opportunities that you may have not otherwise considered in more chaotic market conditions. Don’t be afraid to adjust your search criteria. People from Oakville, Toronto, and Burlington are still coming to this area because it remains less expensive and we have people here moving out to Port Dover, Turkey Point, and Sauble Beach constantly. There is a lot of movement across South Western Ontario. People are continuing to shift out because they are still getting a great dollar and buying an incredible product, even if that means committing to a 40-minute commute for the next five years.
What Can We Expect in the Next 6 Months?
People are now wanting to know what we can expect to happen in the market in the next 6 months. Of course, we can not predict the future, regardless of how much I wish that we could. But I still strongly believe that we will not see a dramatic recession or a situation that we will not be able to sufficiently control. We are so fortunate to live in this country, province, and region and people are continuing to catch on to this. We will continue to see an influx of immigrants and buyer’s from the GTA. The rental market will remain incredibly strong throughout this time. Investors truly love this time as they can buy product at a more reasonable price. In turn, this means that we will see both an influx in investors as well as more inventory beginning to be picked up by them.
In the next six months to a year, we are going to continue to witness very soft appreciation, and potentially none, in the product itself. However, as I always say, real estate is a long-term game and you will never lose if you play the safe card. By playing the safe card, I am referring to buying and holding your product. Someone will pay down the debt and 25 years from now, you will be worth money. If you are in the ‘game’ just to flip, it is sensitive and crucial to know that you could lose money in this market. but if you are in the game long-term, you will never lose in real estate. Also remember, if you are buying high, you are selling high and if you are buying low, then you are ultimately selling low. It all does end up evening out when you are trading in the market.
As always, if you would like to discuss my blog further or if you have any real estate-related questions that you would like to address, please connect with me or one of our experts directly. We are always available and happy to help.