Was January/February 2022 our peak?
Towards the end of 2021, we saw record numbers across the board in the real estate market. (Purchase price)
Many properties were receiving multiple offers in the double digits, realtors were listing low and advertising “$200,000 OVER ASKING!” Many realtors were puffing their chests when in reality a list price in a hot market does not play much of a role in comparison to a list price in a cooler market. In a hot market realtors list low to create a buzz and a bidding war. In a colder market realtors will list closer to market value and a bidding war is less likely.
Some homes in the months of December & January saw an increase in value from $50,000 – $100,000 within weeks.
Something to keep in mind:
The stats that show for “February” are purchases that were probably being negotiated anywhere between January and the weeks of February.
This is why I say our “peak” was in the last weeks of January/ first weeks of February.
Let’s look at the average DETACHED home in Durham Region for example:
December Average: $1,178,857
January Average: $1,325,708 (12.46% increase)
February Average: $1,379,287 (4.04% increase)
March Average: $1,254,499 (9.05% DECREASE)
Here are some key factors that could have played a 9% decrease in this region.
Interest rates rising – The Bank of Canada raised its benchmark interest rate to 0.5% on March 2nd.
Buyer fatigue – With the market rising between 15%-30% yearly in some areas, homebuyers who have repeatedly been outbid, are left disillusioned or in despair
Spring market – With the spring market here, sellers might be more open to the listing. Warmer weather gets people thinking more of moving (in comparison to cold weather)
The province reopening – with the end of the mask mandate (March 21st) sellers might feel more at ease having potential buyers in their homes. This does not mean sellers can not request for potential buyers to wear masks.
Once the month of April statistics come out from TREB (Toronto Real Estate Board), we will be able to see what type of potential market we are heading towards. As of now, there is somewhat of a panic in the market from sellers to buyers.
It will be interesting to see how home sellers react to the ongoing market fluctuation.
Will there be fewer listings? Or will home sellers try to sell quickly, due to fear of the market dropping more?
Written by: Andres Ramirez