The real estate market outlook is much brighter these days after seeing a historically poor run of form.
According to a recent report by Royal Lepage president and CEO Phil Soper, Canada went through a 12-month housing slowdown, the longest in recent history.
Huge jumps in selling prices during the pandemic – with increases of over 50 percent between 2020 and 2022 – were followed by declines of between 10 and 15 percent from spring 2022 to 2023. Inflation, interest rate hikes, and general economic uncertainty led to buyers keeping their money close to home.
However, a more balanced market is coming forth following the slow-down, explains Bob Clarke, owner of Royal LePage Lakes of Muskoka Clarke Muskoka Realty.
“We have started to see inflation coming down, interest rates have paused, and because there is at least some certainty in terms of interest rates those that have money are back out shopping again,” Bob says.
Another item that had the market on hold for a while was that many buyers were looking for significantly low prices on properties due to distressed sellers. But that never happened and a lack of inventory – especially for cottage country properties – continues to be a driving force in real estate prices.
“There are still agents that are over-pricing and they’re still pricing things at or above what we were seeing during the height of the pandemic. And those properties continue to sit,” says Bob.
The Soper report showed that sales volumes dropped considerably in 2022 from the peak in 2021. Year over year through February 2023, listings sat for an average of 4.1 months.
In March 2023, the Canadian Real Estate Association reported a sales-to-new-listings ratio jump to 63.5 percent, up from 58 percent in February 2023, and slightly above the long-term national average of 55.1 percent. The increase indicates fewer new listings on the market, coinciding with a rise in sales.
Soper’s report initially predicted a 3 to 4 percent reduction in pricing with more activity on the market. However, shortly after that report came out, Royal Lepage revised their outlook to predict an increase in pricing.
“There has been enough activity to optimistically adjust the forecast,” explains Bob. “We’re now seeing more sales due to the lack of inventory.”
Buyers continue to shop but are being selective in the process, with offers including conditions such as home inspections back on table, which is also indicating a balanced market.
Over 25 percent of Canadians who put their home purchase plans on hold over the last year have indicated they will resume their property search this spring.
Indeed, those looking for cottage properties have already shown their willingness to buy.
After the long stall, Royal LePage Lakes of Muskoka Clarke Muskoka Realty has witnessed increased activity month over month into the spring – particularly in the recreational waterfront market.
That trend began in early March when properties started selling in the under $1.5 million segment.
“It took off from there,” explains Bob. “In the middle to end of March, there was increased movement in the under $2 million market. Then it kept going to the $3 million and $4 million range. One property listed for over $9 million sold in less than a week.”
It’s a positive trend that will likely continue as the market has corrected itself a bit after the big pandemic property rush. As long as properly priced properties continue to hold value on the market, activity will continue on an upward trend.
“When sellers start to see that there hasn’t been a lot of price erosion and there is a market, and once buyers come to the conclusion that the market values aren’t going to drop considerably, a lot more movement will start to take place,” says Bob. “With everything considered, I’m a lot more optimistic than I was in August of last year.”
TEXT CHRIS OCCHIUZZI