March 2022 Market Report - is this what we have all been waiting for??

By: Ben Sage

March 2022 Market Report - is this what we have all been waiting for??

Tags: Stats, Market, Woodstock, Real Estate, Sales, March, 2022

 
Welcome to April! 

Spring is springing all around us! I, for one, am very happy to see the return of green grass, and (eventually) blue skies.  

After a dizzying February (one of the craziest February's I can remember), March seemed to usher in a slightly moderated real estate market in Woodstock. 

For several weeks I have been hearing anecdotes of slowing market activity in some of the bigger markets to our east (GTA, Hamilton, Brantford, Kitchener/Waterloo, etc).  We are finally beginning to see some signs of moderating in our market here in Woodstock now as well.  With the number of listings up by a huge margin, one might have expected a drastic change, however, there were also a large number of sales to blunt some of the impact of more listings. 

On March 2nd, the Bank of Canada began its long-anticipated interest rate hiking program.  Due to off-the-charts inflationary pressure, the bank began raising the benchmark interest rate on March 2nd, increasing it by 0.25% to only 0.5%.  The bank is forecasting several more rate increases this year, some economists forecasting an optimistic future-level of 2.5%, some as high as 3.5%.  After an extended period of historically low interest rates, some borrowers may be in for a surprise, if rates rise to 3.5%.  For now, the overnight rate sits at 0.5%, with the next rate announcement scheduled for April 13, 2022.   It is anticipated that the overnight rate will rise by 0.5% at this policy meeting, to bring the overnight rate to 1%.  

Let's take a closer look at some details from March 2022.....
 
 

Average Sale Price:

After a seemingly endless rise, the average sale price actually pulled back a little bit in March. 

In the month of Marc 2022, the average residential property purchase price in Woodstock (including all residential property sales reported on the Woodstock-Ingersoll District Real Estate Board MLS system) pulled back to $783,449. This is a drop of 7% from last month's average sale price of $842,602. 





This chart shows a 20 year history of average sale price (Red line) and annual increase (percentage over prior year, grey bars). 


Average Sale Price (Detached)

I like to track the benchmark "detached" home sale price, to give me an idea of how that compares with attached and semi-detached homes.  

In March, the average sale price of Detached homes also dropped, 9% month over month.  It ended March at $847,294.  Last month, this measured a staggering $928,212. 

Number of Sales

March boasted a HUGE amount of sales, with a whopping 106 homes changing hands on the Woodstock MLS system.  This was up 36% from February, and shows continued activity in the local Real Estate Market. 


Average Days on Market

This metric is probably the most artificially manipulated measurement in the market currently, but I do follow its trend.  What I am seeing nowadays is that sellers will list a property, and state that they will hold back offers for a specified period of time, yet remain open to an early offer under certain circumstances.  This is commonly known as a "bully" offer, though I prefer the term "pre-emptive" offer. 

There has been no change in this number since January.  I will be watching thie one carefully as things begin to shift towards more normalcy. 
 
So once again, this metric doesn't mean much, but I felt it should be included.  At the very least, it prompts a conversation about speed in the market. 


Number of Active Listings

Finally!  FINALLY, we are seeing an actual, measurable increase in the number of listings.  This is likely to come as welcome news to anxious home buyers, wondering if they might ever see a bit more balance in the market ever again!!  

Well, it seems to finally be arriving, although houses remain quite expensive when compared to wages. 

So, how does the active inventory look?

The number of homes for sale at the end of March 2022 was well up, to 58This is up 200% from last month's total of 29.  




It's important not to get too carried away with what this actually means.  So, for reference sake, here is a short history of active inventory at the end of March: 

2022 - 58
2021 - 30
2020 - 72
2019 - 112
2018 - 90
2017 - 72
2016 - 184

So after an incredible run of extremely low inventory, the uptick is nice to see, however, it's miles away from actual "balanced" market conditions.  

Here's how the inventory levels look, since 2011:

Supply vs. Demand

Finally, the true measure of the trajectory of the market lies in how supply relates to demand.  I have charted this particular metric for the past 10 years.  As you saw earlier in this report, supply has ticked up slightly this month.  But, how does the demand stack up?  Have a look.  Keep in mind, the lower the line, the less supply exists relative to demand

March is showing an increase in inventory, to 0.55 months of inventory (yep, still just a half a month worth of homes...). Yes, this means if nothing else is listed, and sales continue on current pace, there will LITERALLY be nothing to sell or buy in the middle of April. Seeing as this is traditional "listing season" I don't see that happening!!  

The Blue line represents 2022 YTD, Red is 2021, and Yellow is the past 5 year average.  

Please note: I have changed the scale on this image.  Since it has been years since we saw balanced market (5-6 months of inventory), this chart now displays 0-2 months of inventory. This was done so that we could more easily determine the best time to list a home for sale, or to be shopping for a home.  

Sellers always wonder "What is the best time to sell my house?" They seem to want to attach timing to a calendar.  We have been trained, for whatever reason, to believe that spring is always the right time to sell.  But I firmly believe the best time to sell something is when supply of that thing is low, and demand is high.  This is a pretty rudimentary concept.  The reason I put so much stock into this metric is because it allows me to answer that question with complete confidence.  

If you look at 2021, statistically speaking, the best time to sell was in February/March, and November/December.  Counterintuitive, right? 

I'm thinking that when we look back on 2022, the best time to have sold might have been January / February, but it is important to understand that even though things have changed slightly for the first time in months, it remains  an exceptional time to be a home seller, and the challenges for buyers will continue, at least for now. 

 

Do you need to make a Move?

If some kind of Real Estate move is in your plan for 2022, you can rest easy, and put my 14 years of experience to work for you. Every market presents its own opportunities and difficulties. The interpretation of the data, and how it relates to your particular circumstances, is where I can truly help you! 

If you are a Seller, having a strategy has never been more important. Here's how my sellers have maximized on the current market trends:
  • Staging: Yes, I am still recommending staging. This is an extraordinary opportunity to capitalize on market trends. Yes, you will likely sell if you don't stage, but there is a measurable difference in price and terms when buyers are climbing all over each other to submit an offer on your home.  Why not take the time and make it look its absolute best before showcasing it to the market?
  • Pictures. My residential sellers ALWAYS get professional photos. Highlight the best features of your home with professionally staged and captured photography! Additional bonus, a keepsake. Your home has probably never looked better.  Keep these professional photos for posterity!
  • Virtual Tours. Essential in today's market. To limit in-person showings, and to embrace buyers who might be shopping from a couple of hours away, I always include a professional virtual tour.  Buyers can safely, and realistically tour your home from the comfort of their couch! 
  • Video Tours. If a picture is worth a thousand words, a video is worth millions! Moving camera open house tours of your home, on youtube for everyone to enjoy. Why not cater to the video loving public? 
  • Floor Plans. Not into pictures, virtual tours, or videos?  That's cool - buyers have the ability to print out my sellers' floor plans and determine "where the couch goes" or "will our king bed fit in this bedroom?" before darkening your doorstep! 
  • Offer Handling. We will work together to create a plan that works for you and your circumstances.  There is no "one size fits all" strategy. Throughout this sellers market, I have continued to hone the craft of maximizing the opportunity that sellers have in this market, to get you the best possible price and terms on your sale!
If you are a Buyer, things are going to be difficult for you, but there are great reasons to get into the market now!
  • Low Rates.  When I bought my first house, our mortgage rate was just over 5%.  The lender said he couldn't believe how low the rates had gotten, and that we were fortunate to get such a low rate!!  Well, as of today, the big banks variable mortgage rates are hovering around the 1.3%-1.6% range. For the math blessed, that's less than 1/3 the interest rate! Crazy! 
  • Appreciation. There's an old saying in the real estate world. "The best time to buy is 10 years ago.  The second best time is today."  I know prices seem high, and competing is scary and difficult, but if you can get in now, even if things take a bit of a dip in the short term, Real Estate is a long game anyway.  In a decade, a small blip won't make much difference to you. Buying today will get you:
    • Stability of Ownership. With trouble in the rental market (limited supply, landlord/tenant issues at an all time high, evictions happening like crazy), owning your own home, even if it's just a stepping stone towards your goal of ultimately buying your dream home, gives you the security that the landlord won't suddenly change their mind and sell the house, or require occupancy for themselves or a family member, or other issues associated with renting. 
    • An Iron in the Fire. Many home buyers over the years have had to make stepping stone purchases.  They buy something slightly less ideal than their dream home, with the hopes of improving it, and riding the wave of appreciation to their next home, eventually arriving at their dream home. It's unlikely you can save as much money as homes are going up in price currently, so one way to "hedge" against this inflation is to have an iron in the fire.
  • Off Market Opportunities. My buyer clients receive the additional benefit of off market opportunities. By the time a home is listed on MLS® it is already a feeding frenzy, competing with other buyers.  Some sellers don't want that feeding frenzy in their home, and would be happy to sell it to someone through an off-market transaction. People who are CLIENTS of mine, get shortlisted for those opportunities as they come along. I have other marketing techniques to locate off market opportunities for my buyers as well.  Rest assured, I'm working to find you a home, if you hire me to help!
 
 

Closing

Thank you very much for taking the time to read this market report. 

Unfortunately we can't control the market, but we can work as hard as possible to capitalize on what it provides! If a move is in your future, let's chat today to get you started on your plans. Even if you don't want to do anything until summer or fall, starting your project early is a great way to optimize your experience. 

If you're interested in a free, 15 minute video or phone chat with me to discuss your real estate plans, click here to book an appointment. 

Thanks again, and happy new year!