Spring 2023: What you need to know about what might be on the horizon….

Information about the real estate market abounds these days, from print journalism to social media to the nightly news: how does one make sense of it all?  It’s almost like a firehose of information, and I really feel for the public as just last week I read a news article that had completely contradictory statements by the penning journalist in the very same article!  Whatever the source of information, it’s always prudent for consumers at large in Canada to adopt a critical thinking approach to all of it:  How can I break this down to a few key morsels of information that will aptly inform and give me a sense of whether I want to reengage/embark on some real estate goals imminently or simply put the brakes on?
 
Generally, it’s critical to take a quantitative profile of what is happening ‘on the ground’ if you will with sale prices, the number of homes selling, the current listing inventory, (how many homes are for sale), and what happened with the market the last time those market conditions presented themselves in the past. Looking critically at that profile in the context of current employment numbers, consumer confidence, and specifically what is going on in Canada vs the States is generally always prudent. We had to be very keenly aware of market context during the ebbing and flowing of shutdowns and re-openings during CoVid19 in the last 3 years. Our mortgage default rates in the 2008/2009 financial crisis in Canada stood in stark contrast to those rates seen south of the border in the US. 
 
What’s interesting right now in Durham Region is that the percentage of properties selling above list price is on the rise again.  If we look at what percentage of properties sold above list price in the first three months of this year’s spring market, there is something that is noteworthy you could miss if we didn’t look at it in the context of previous markets. 
 
Jan 2023 - 34% of homes sold above list price.
Feb 2023 - 46% of homes sold above list price.
Mar 2023 (until Mar 27) - 56% of homes sold above list price.
 
Feb 2022 - 94% of homes sold above list price (by the way that month had the highest sale prices recorded in Durham Region ever). 
 
If we look at a simple graph of the percentage of homes that are selling above list price in Durham by month since Jan 2022, it looks like this….



Interestingly, an additional graph below that goes all the way back to 2013 provides some comparative context. The blue line indicates the percent of homes selling above list price. The orange line is the average sale price by month. The red boxes literally ‘frame’ the time periods when the percent of homes selling above list price went above 50%.  Every time that happened in the past, sale prices spiked (2016-2017, 2020-2022, and now we are above 50% again in 2023).



So, looking at these metrics, what’s the forecast then? Well, if you simply want to purchase when sale prices are lower (first time home buyers, investors, parents wanting to help co-sign for their adult children), delay your purchase at your peril: sale prices may climb further still here in Durham Region in 2023. Should you want to downsize, know that the sooner you get your head around what you might like to downsize to, the better. If you decide to start looking for properties to downsize to at the pinnacle of sale prices, know that at that point you may be competing against more buyers for the scant properties for sale. One ingredient present right now like a flashing neon sign in this spring 2023 market is the lowest listing inventory in March we have seen since 2017. What followed were record high sale prices a month later in April of 2017. Add a dollop of consumer confidence and the return of buyers to the market, and we just may have a perfect recipe for surging sale prices in 2023…