The Market: All good things must come to an end. Or must they...?
Another day, another headline about the real estate market. Only now the story is a little different. Tales of how activity continues at a frenzied pace and selling prices continue steadily upward have been replaced with sales numbers stalling and prices dropping. Typically though, regardless of whether an upswing or a downswing, the suggestion that things are bad seems to prevail.
But are they really as bad as the headlines suggest? And how does this translate to East Gwillimbury?
Perhaps it’s a good idea to take a closer look at the actual EG numbers to see what’s going on here, close to home. (As per the Toronto Regional Real Estate Board “TRREB” and their MLS system.)
In the last half of 2021 sales activity was fairly consistent and averaged 62 sales per month July to November. Sales dropped in December (36) and January (40) but then shot up again in February (67) and March (86).
Note that sales volume is not purely a function of demand: ever since the initial (and temporary) pandemic slow down in April and May 2020, the market has been severely under-supplied compared to active demand. In fact, the number of active listings in December and January were the lowest they had been in years, which is likely a contributing factor to the lower number of sales. (That, and the slowdown that time of year typically sees.) Since February the supply has steadily increased which is also quite likely why sales activity shot up in February and March.
But then in April there were only 50 sales recorded in the month so, unlike December and January when the number of homes available for sale was constrained, a lack of supply is much less of a factor in the drop in sales activity.
So what could have caused this drop?
From specifically a real estate perspective, rising buyer-fatigue caused by almost 2 years of un-buyer- friendly market conditions and a large and sudden jump in mortgage rates combined to force many buyers to put their purchase on hold for the time being.
There are, of course, national economic policies and international geo-political disturbances causing market volatility in all sectors, not just real estate. The result is that consumers are more focused on overcoming the disruption to day- to-day life instead of exploring non-critical big ticket purchases.
But what’s happening with pricing? Naturally the rising supply and dropping demand should lead to a drop in average sale price. Accordingly the average monthly sale price hit consecutive all-time records to close out 2021, peaking in January at $1,662,193 and then dropping slightly each month since.
In April the average sales price was “down” to $1,503,390, which is almost a 10% drop from January. Even still, it should be noted that this is still the 5th highest average sale price ever, ranking only behind the previous 4 months and almost $150,000 more than October and November last year.
So indeed the EG real estate market seems to be consistent with the larger, more publicized trend: sales have slowed and prices are no longer pushing upwards to seemingly unlimited levels.
The key questions, to which unfortunately there is no definitive answer, is what does the future hold?
There are so many different predictions from the experts (self-acclaimed or otherwise) so there’s little chance of a consensus. That said, it seems that while there has actually been a noticeable reduction in the frenzied pace of transactions, there are still enough buyers and sellers in the market to keep things moving in a more normal, reasonable, and mutually beneficial fashion.
Not only that, but played in the short term the real estate game is no different than the stock market: you can win big but you could also lose big. Again and again. But considering the more typical longer term view that most people take in their real estate life, it would be hard to lose by betting on the East Gwillimbury market.
So whether all good things must come to an end really depends on your definition of a good thing.