Woodstock Market Report - November 2022

By: Ben Sage

Woodstock Market Report - November 2022

Tags: Stats, Market, Woodstock, Real Estate, Sales, August, October, 2022, correction, average sale price, house value, home values

Welcome to the November edition of the Woodstock Homes Monthly Market report.  

Up and down and up and down and up and down - that's been the story of our market since rates began rising in March of 2022. 

Big Banks, CREA (the Canadian real estate association), CMHC (Canadian Mortgage and Housing Corporation) have forecasted a correction in real estate values of 30% from Peak to Trough, with the decline expected to complete by Spring of 2023.  I've long wondered how that would play out in Woodstock, specifically.  

At the moment, our peak to trough reduction in AVERAGE sale price in Woodstock is currently 27.7%.  It has hovered around that much (between 20.5% in May and 29.2% in August) since rates began increasing in March. After a measurable increase in average sales price in September, average sale price again dropped this month, continuing the see-saw pricing activity that has been the "norm" since spring. 

I am still cautiously optimistic that our market correction has largely finished, but I am also concerned that there may be more value-loss to go! Behaviour of sellers and buyers will (obviously) dictate pricing in the future.  

What we are seeing right now in Woodstock is declining active inventory, and tepid demand.  The reduction in available inventory is largely due to a "wait-and-see" approach being taken by sellers, as is the tepid demand.  Lack of supply is once again (still?) propping up house prices. It's difficult to predict what might happen in the future, but if rates keep increasing, buyers will continue to be scared away, and sellers may sooner or later be FORCED to sell, as renewals bring way higher mortgage payments, putting home-owners in a tough position. 

Read on for the specifics of how the real estate market performed in October 2022.

Average Sale Price:

After an unexpectedly large jump in average sale price in September, most of those gains were erased in October, with average sale price dropping 8.98%. 

Compared to last month, this is more in line with my expectations, based on observations, newsmedia reports of falling values in the broader Ontario Real Estate market, and anecdotal reports out of the Toronto real estate market. 

I expect prices to continue to drop, although at a slower pace, after the bank of Canada increased the overnight rate by 0.5% on October 26.  The bank rate now sits at 3.75%. This is the highest the rate has been since early 2008.  The BoC's next meeting is scheduled for December 7, and although it is a bit early to begin predicting what their decision might be, my expectations are that rates will indeed increase again.  With the Federal Reserve increasing rates more quickly in the United States than Canada's rates, there are real risks to our dollar, so the BoC may be forced to increase higher / faster than otherwise.  Expect 0.5% as a minimum, I'd say! (I am not an economist!!)

In October 2022, the average residential property purchase price in Woodstock (including all residential property sales reported on the Woodstock, Ingersoll Tillsonburg Area Association of Realtors) decreased to $ 609,098. This is a pullback of 8.98% from last month's average sale price of $669,211.

This chart shows a 20 year history of annual average sale price (Red line) and annual increase (percentage over prior year, grey bars).  I'm anxious to see what happens to this chart at the end of 2022!!  

Average Sale Price (Detached)

After a couple months of drops in average sale price, the "detached" home average dropped massively this month, down 15.7% month over month.  It ended October at $632,631. 

February's high was a staggering $928,212. 


Number of Sales

October represents the bulk of the "second spring" market. The fall is usually quite busy with sales, however, with the timidity in the market, we are seeing an understandably low number of transactions this fall.  The "wait-and-see" approach is evident! 

The number of transactions remains stubbornly low, with just 54 this month.  This was up 14.9% from September's dismal performance, but FYI, October 2022 represented the fewest number of sales on our board for the past 12 years! 

Check out October Historical Sales Numbers


Average Days on Market

Here it is! The amount of time homes are spending on the market is positively through the roof!!  Although not the highest I have seen in my career, the jump is noteworthy!! 

As you have probably noticed while driving around Woodstock, we are definitely seeing a continued increase in the amount of time homes spend on the market.  With all of the trickery going on with holding offers, cancelling-and-relisting, etc., the DOM has remained below 10-11 for 2 + years. 

As seen here, DOM ticked up ABSOLUTELY MASSIVELY (77.8%) from 45, to 80!!!!!

A note about this metric.  Although I call it "DOM," the stat I report is known internally as CDOM.  The "C" stands for Cumulative. This stat tracks the amount of time a house has spent on the market in it's current listing cycle. So if the home came off the market for a few days in order to repair something, adjust pricing, stage, etc., but was promptly re-listed within a short period of time, the DOM metric resets, but the CDOM metric continues to count from the original listing. 

Number of Active Listings

Even though we are seeing extremely low # of sales, the amount of new inventory is not keeping up with demand.  

Make no mistake, inventory is up overall.  We have to go all the way back to April of 2016 to find a month-end with over 170 homes for sale.  The decrease in available inventory has been pretty steady for the past few months, with the number of homes for sale on the market dropping even more at the end of October, down 9.7% to just 149 houses for sale. 

This could absolutely increase, and it could happen quickly.  A glut of inventory on the market right now would be a HUGE dagger to sale values, as stingy (actual) new inventory is definitely buoying sales prices. 

So after an incredible run of extremely low inventory, the uptick is nice to see, however, it is really just returning to a little bit more normal market conditions. 

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

Supply vs. Demand

This is my favourite tool for assisting clients in estimating market value for their homes.  This tool measures the constantly-changing dynamic between supply and demand.  When reading this graph, keep in mind, the lower the line, the less supply exists relative to demand. Low = Seller market, High = Buyer's market. 

October is showing another slight adjustment back towards a sellers market , ending the month at 2.76 months of inventory. This leaves us in seller's market territory, but, JUST BARELY. 

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

How to interpret this information? 

Traditionally, a supply of between 4-6 months of inventory means that sales prices are likely stable, not really increasing, or decreasing by any drastic amount.  A supply lower than 4 months indicates a seller's market, with pricing appreciating faster than inflation, and a supply over 6 months is a buyer's market, with prices dropping rapidly, and days on market growing.  

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've long predicted that January/February 2022 was probably the best time to sell a house, and so far that remains the case.