Summer Market Forecast: Inventories are Rebuilding and Prices are Softening
Patti Cosgarea
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The month of May saw more than 50,000 units trade hands, leaning close to the 10-year average for the month, but this represents a decline of 21.7% below the record set in May of 2021. On a month-over-month basis, home sales fell by 8.6% in May, but approximately 588,288 properties are still expected to sell in 2022. A decline of 14.7% from 2021 but still the second-highest annual record ever.
The rise in inventory is expected to contribute to this figure. After a slowdown in overall sales in April, following interest rate hikes, the number of newly listed properties in May was up 4.5% month-over-month. Compared to the start of 2022, this is an increase of almost 69%. But the question on every buyer and seller’s mind is how the ever-growing interest rates will affect the market this summer.
- Read: Four Tips for Buying a Home Following Bank of Canada’s Interest Rate Increase
Prices are Still Expected to Drop Moving into the Summer Market in Certain Regions
The national average sale price posted a 3.4% year-over-year gain in May sitting at a little over $711,000, rising at a much more manageable rate than this time the previous year. The Canadian Real Estate Association (CREA) is expecting the national average home price to rise by 10.8% on an annual basis to $762,386 in 2022. The largest price gains are expected in the Maritimes, which is no surprise after Moncton was named the best place to buy real estate in Canada in 2022. Ontario and Quebec are also expected to see more price gains this year in certain regions. However, some cities have already seen steep declines in home prices versus April, especially in Oakville, Orangeville and Oshawa. For those home buyers on price watch, location is key – different trends are emerging when comparing major markets and provinces.
- Read: The Best Places to Buy Real Estate in Canada in 2022
Prospective Sellers Should Consider Options as Prices Could be More Modest in 2023
The 2023 forecast is expected to be more modest, with CREA reporting that the national map average home price may rise by only 3.1% on an annual basis, for an average price of $786,282. This means that home sellers that are on the fence should consider speaking to a real estate agent about their market and their home’s value now.
Home sales are also expected to decline a further 2.8% to 552,403 units in 2023. Markets including the Lower Mainland, Calgary, Edmonton, the Greater Toronto Area (GTA) and Ottawa saw a decrease in sales. As inventory rises and sales slow, the sales-to-new listings ratio (SNLR) in May was 57.5%. This ratio is used to determine what type of market we are in, with 50% signaling a balanced market. This is its lowest level since April 2019, although still in line with the long-term average of 55.1%
- Read: Shoutout to Home Sellers: This is What to Expect in a Balanced or Buyers’ Market
Some Ontario Markets are Still Experiencing Price Gains
While many markets in Ontario saw prices dip month-over-month from April, cottage country along with many smaller cities in the province are still experiencing steady price gains despite an increase in inventory.
Peterborough & the Kawarthas
According to the MLS HPI composite benchmark price, Peterborough and the Kawarthas have yet to see a decline in price. The composite benchmark in May 2022 was $793,800, an increase of 0.1%. This is great news for sellers as they can still expect to sell their home with a profit and buyers are now experiencing a more manageable change in prices.
Simcoe and District
Simcoe experienced a strong month in May, with more than 256 active residential listings on the market at the end of May, a 61% increase from the end of May 2021. Average price of homes sold have also grown by 19.6% from May of 2021, to $774,599 in May 2022.
Tillsonburg District
Tillsonburg saw 291 new residential listings in the month of May. This is a record number for the most new listings added in the month of May. This is great news for buyers looking for their perfect home in the growing city. The MLS HPI composite benchmark price was $671,800 in May 2022. This is an increase of 22.6% compared to May 2021.
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