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

The shift is definitely continuing, as average sale prices in Woodstock took a huge hit in the month of August. We have now reverted back to somewhere between January and August 2021 levels (average prices were relatively flat during that time).

However, from the beginning of the pandemic (March 2020), average sale price in Woodstock is still up 30.9%, when comparing average sale price in March 2020 with the average sale price in August of 2022.

It's been quite a ride to get there, but that's how things look right now. 

Are we going to continue to unwind pandemic gains?  Only time will tell.  

The Bank of Canada is scheduled to make another interest rate move on September 7, 2022.  Many of the experts surveyed believe that the bank will raise overnight rates by 0.5% to 0.75%, and they have stated that this will be the end of the current rate adjustment period.  Ideally, this move will put an end to inflation (which has already started to drop), and we can start to see everyday pricing returning to somewhat-normal prices.  

A rate increase will certainly have an effect on housing prices, as higher rates mean lower affordability for home buyers.  This translates into lower sale prices. 

The last part of the summer is always a slow time in Real Estate.  Most of the clients I am working with are in a "wait and see" mode.  I do expect activity to increase come mid-September, once back-to-school routines are re-established and folks begin their "in-by-Christmas" routines.  

Depending where you are in your home ownership journey, whether just starting out, looking to upgrade, or downsize, the strategy will be different, and must be crafted according to the market conditions.  

For now, let's take a closer look at the details from the Woodstock Real Estate Market in August 2022.....

Average Sale prices slipped somewhat drastically in August, compared to recent months, dropping by a whopping 7.27%. 

We are now exceeding many of the bank's predictions that values will decrease by 23-24% from their pandemic highs.  

February 2022 was our peak.  The average sale price in Woodstock at that time was an eye-watering $ 842,602.  That's a reduction of 29.2%!!

I was incorrection in my optimism that price declines were stabilizing (in my report last month), and I am now cautiously optimistic that we have shed all (or most) of the value. I do believe that house-prices, much like the stock market, are pricing in future increases in interest rates, as almost NOBODY believes that the bank will raise rates less than 0.5% on Sept 7th. 

In August 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 further back to $596,371. This is a drop of 7.27% from last month's average sale price of $643,115.





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!!  

After an drop in average sale price in July, the "detached" home average plummeted again this month, down 6.8% month over month.  It ended August at $638,317. 

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


 

August is always a slower month for # of transactions, as people are enjoying their summer vacations, and focus is really not on moving houses.  In August 2022, just 53 sales on the WIDREB MLS system, which is UP 15.3% from July (46), but well below the average # of transactions that normally take place in August.  





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With the low sales numbers in August, you'd have expected the number of listings available to jump through the roof.  But that hasn't started happening yet... 

As mentioned earlier in this report, I am hearing throughout my network of real estate brokers, and seeing In my own business, many buyers and sellers are choosing a "wait and see" approach to their plans.  I think, if that reflects the broader sentiment, that partially explains why we aren't seeing a huge uptick in available homes to buy.  What we are mostly seeing are those who need to make a move, for whatever reason. 

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 amount of available inventory has been pretty steady this summer, with the number of homes for sale on the market dropping just 2 between the end of July and the end of August.  

This could absolutely get worse, and it could happen FAST.  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. 

The number of homes for sale at the end of August 2022 was down 1.1%, to 175.




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:

To truly understand the trend, we must look at how supply relates to demand.  As you saw earlier in this report, supply has ticked up measurably over the past few months. But, sales have disappointed...  This is a visual representation of how that looks.  Keep in mind, the lower the line, the less supply exists relative to demand. 

August is showing a slight dip in inventory relative to demand, down to 3.26 months of inventory. This slight contraction is welcome news to home-sellers who have hoped to retain some of their pandemic value boost! 

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.  

We are getting SUPER close to 4 months of inventory....




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.  

 

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 fall, starting your project early is a great way to optimize your experience. 

If you're interested in connecting with me, I'm happy to discuss your real estate plans! Call or text me at the number below:

Thanks again, and happy summer!!