August 15th 2023
The average price across the region continues to paint a blurry picture. Last month you may recall, the price was up from May by $30,562 or 4.33%. But May was actually down from April by $12,602 or 1.75%. Now the sales figures have come in for July and the average is a somewhat disappointing $717,398. That’s down from June by $19,093 or 2.59%, pretty much where it was at the end of April. Still up $61,061 or 9.30% from year-end 2022 which is encouraging. But it’s finding it difficult to make solid headway. Gaining one month and then giving back some of those gains the next.
Also, you will see from the chart that the price trends are not consistent from one municipality to the next. Both St. Catharines and Niagara Falls, which represent the two largest municipalities in the Region are up over June. St. Catharines by $22,676 or 3.51% and Niagara Falls by $5,697 or 0.84%. And speaking of gains, Fort Erie came in at $693,478, an increase over June of $82,921 or 13.58%. But at the same time, Thorold showed a drop in average sale price of a whopping $142,696 or 18.31%, Welland a drop of $27,727 or 4.32%, and Grimsby a drop of $182,160 or 18.47%. In just one month.
We need to keep in mind of course that this does not necessarily indicate a drop in the value of real estate within these municipalities. And certainly not a drop of the magnitude the numbers would indicate. First, we need to remind ourselves the smaller the municipality, the fewer the number of sales. And the smaller the sample size, the more the average price can be skewed by one or two large sales present one month and absent the next.
We also need to keep in mind that with the somewhat steady increase in interest rates of late, people simply cannot afford as many houses as they once could. This does not mean the price is dropping in any particular house size or style. It simply means people are lowering their buying expectations.
Now let’s switch our attention over to unit sales. As we see in the accompanying chart, a total of 540 residential units changed hands in July
This too gives us a somewhat mixed signal. At 540 units, we are down 113 units or 17.3% from the 653 registered in June. That’s not at all surprising. As we can see in the attached graph, except for the incredible flurry of sales generated during the covid era, pretty well every year registers a decline in sales volume as summer comes to an end. And on a positive note the figure of 540 units registered sold in July is 145 units or 36.71% higher than was registered one year ago.
But remember 2022 saw sales not just decline, but actually plummet pretty well every month after March due to the epic slide in prices during that period. Historically as you can see from the graph, 540 units is pretty low for July in pretty well any typical year.
Of course, sales and prices are also to a certain degree contingent on inventory. So, we really should see what’s happening there over the past month. In July 2023 we saw a total of 1,280 new listings come onto the market in Niagara. That’s down slightly 123 units or 8.77% from June. But it is actually up 106 units or 9.03% from July of last year. That’s the first month since January that has seen this year register more new listings coming on stream than the corresponding month of 2022.
A word of caution, however, about listings. These figures don’t take into account expired and re-listed properties or listings that have been terminated and re-serviced. That’s the reason I don’t put a lot of stock in the new listing numbers. However, assuming re-list and re-service occurred at a relatively consistent pace, it can indicate a trend of gradual growth in available stock.
So, in summary, I see a real estate market that is struggling to recover. We are not in the price free-fall we saw immediately following covid. Nor are we in the rapid acceleration of prices we experienced during the covid era. The prices are gradually recovering, and unit sales are inching higher when you take into account seasonal adjustments. But the recovery is slow. At some point speculators will be very active again and prices will once again spike. But it may take some time.