So what are we seeing in the market? The question we always ask is, what do the numbers show and more, what do they mean? Most headlines we're all reading right now are either the most anxiety inducing they can come up with or just extremely confusing.
But the three things I’ll be tracking continuously over the next while, to alleviate the anxiety and confusion are; the unemployment rate, new listing supply and months of inventory more specifically, plus sales volume.
New listing supply, but again and more specifically the months of inventory is watched extremely close, because it’s a great indicator of who’s panicking and who’s not. So far, as we’ve seen, most property owners in Hamilton, Burlington, Haldimand County and North Niagara are not panic sellers. Most people that are making moves are mostly doing so because they want to and not 'Need' to.
Upsizers are making great moves in this market because it makes sense to upsize when the market is down like this. Remember, leaving 10% of a $500K house/condo on the table vs. saving 10% on a $1mm buy makes sense right now. The even better news is the volume of amazing sub $1mm properties that were well into the $1mm price point back in January, February and March. We talked more about that in last week's update if you're interested in hearing more about why this is a huge opportunity. Let me know at hello@jameshand.com.
Next I’m looking at sales volume and the unemployment rate to gauge Buyer sentiment; buyer sentiment is at an all-time low in the Hamilton area. And every other city across the country for that matter…well, in most cases with a few outliers, I’d imagine.
So, where do we stand as Buyers and Sellers in our area today?
Well, many buyers have been sidelined either because of choice or by being forced out. Interest rate hikes will do that.
So today a buyer is likely NOT in heavy competition when offering on a house or condo. But in saying that, as we’ve seen every week, the under-list strategy is working in some cases, so as a buyer you could see it. Typically though even in multiple offers you often only go $5/$10k over asking.
However, sometimes you’ll see those reports of “property X get’s 99 offers and sells $400K over ask” type headline. Those are heavily, heavily skewed and actually manufactured numbers.
But even though we've used a very slight variation of this strategy in conjunction with our heavy digital and traditional marketing, the offer numbers are still somewhat false. We had a property a couple weeks ago where we had over 20 offers. Here's the breakdown of what happened.
13 were under asking
2 were at asking
4 were under $5000.00 over asking
2 were under $10,000.00 over asking
Winning bid was $12,340.00 (see what they did there) over asking.
But right now for buyers, they should be updating their pre-approvals every 60/90/120 days to lock in the lower rates before their pre-approvals expire. We're likely to see one more (hopefully slight) increase on October 26th. So if you've got a pre-approval (not pre-qualification) coming up, be sure to get yourself set before then.
For sellers, if you're moving up into a more expensive home, the numbers as I said look good and often really good in some instances. Depending on specific situations and the markets you're looking in sometimes selling right now to make another purchase is a really financially sound decision. Others though I'd say wait to sell if possible. If you're curious about your situation looks like, reach out. I'm happy to have a chat.
If we do see another hike, what will it look like?
Many experts are predicting a 25bps hike and possibly another 25bps hike but I’m not quite as optimistic. With some of the language used I feel like we may have a possible 50bps 'super' hike coming. If we see any of that, there will be more downward pressure on prices.
And this announcement will also discuss the monetary policy going forward.
Remember, we’re not seeing many of the effects of these changes in different areas for sometimes up to 6 quarters from now. So it’s safe to expect late 2022 and early 2023 could be relatively slow in terms of people’s spending.
However, once we are into a possibly short (fingers crossed) recession, the talk is that we will possibly see rates decreased by late Q1 and into the mid-year of 2023. If this happens then we could see prices begin to increase again.
So, to quit the rambling on......what do the numbers say and what do they mean right!? I promised to explain them, so here we go, per area.
Hamilton- As a whole after nine months into the year, sales activity has eased across pretty well all municipal areas within the Hamilton region. Although in saying that, Hamilton East is the only area to record year-to- date sales consistent with the overall long-term trends.
And despite some adjustments in the new listings that have been hitting the market, slower sales have caused inventory gains across most regions and have contributed to the shift we're seeing and hearing about to more balanced conditions.
As the media says "prices are dropping". To put that into context though, they've generally been trending down across all neighbourhoods and zones within the Hamilton area. However, Waterdown and Dundas have seen relatively small price adjustments since the beginning of the year. So it's not easy to put a blanket statement on the entire area. Nonetheless though, when we're considering the market based on the average price on a year-to-date basis, prices still remain higher than last year’s levels across all regions within the Hamilton area.
So what does that mean. Simply the old saying stays true. "Don't wait and buy, Buy and wait".
Burlington- While conditions in Burlington have changed compared to one year ago, some parts of the city continue to experience relatively low inventory levels based on sales activity. For example, Burlington 32, and 35 both continue to see below two months of supply while 31 and 38 have seen their months of supply push up above four months.
So most of the areas where the months of supply remained relatively low, of course they've not faced the same level of price adjustment as those where the months of supply is higher. However, September’s total residential benchmark prices remain below last year’s levels across all of Burlington.
Niagara- All locations within the North Niagara region saw conditions shift out of a seller’s market, West Lincoln and Lincoln saw their months of supply pushed up above 5 months. This matters because it's much higher than levels traditionally seen at this time of year.
The oversupply in these areas is having a more significant impact on price relative to what is happening in the more balanced market of Grimsby. Now don't get this twisted, while there have been recent monthly price adjustments, all areas within the region are still reporting selling prices year-to-date that are hitting at or over average price growth.
Haldimand- Nearly 90% of the sales in Haldimand were detached homes. While detached sales this month have declined across nearly every price range, it hasn't offset earlier gains recorded from homes priced above $800,000.
The decline in sales in the lower price ranges is in part due to the continued pullback in new listings. Homes priced under $600,000 recorded a 31% decline in new listings so far this year, where higher priced homes saw listings rise by 57%.
The typical detached home in the areas has faced downward pressure on home prices since April of this year. However, the recent steep declines over the past few months have contributed to the benchmark price for a detached home to fall to $711,900. While this is lower than prices recorded at the start of the year, prices remain nearly 3% higher than last September. To put this into context, this is still good when looking at overall trends.
So here's the dollars and cents of each city and area.
Check Out The Area Details Below
