September 16th 2024
This month marks the 2 ½ year mark since the robust real estate market of the covid era came to a halt, and what I’m going to call a real estate recession began. First with a steady erosion of prices over the balance of 2022 and a pretty rocky road since. This month also marks the third consecutive month where we have seen a 1/4 point cut in interest rates compliments of the Bank of Canada. So where does that leave us at this point?
Let’s look at the numbers. And once again as we did last month, let’s begin with the average sale price recorded municipality by municipality both throughout the year 2023 and then up to the end of August 2024.
You’ll see that during the first 6 months of 2023 the average sale price across the Region grew by $108,930. That’s from January’s $627,561 to June’s $736,491. A remarkable rise in just 6 months. But then the next 6 months erased pretty much all those gains dropping to an average sale price of $644,067 by December 2023.
This year saw a similar pattern with prices rising a total of $93,932 from January’s $650,178 to a high of $744,110 in June. But then July saw a drop of $54,056 or 7.26% in just one month. That’s a steeper one month drop than we saw happen in any one month of 2023. And it was also at a time when the market had enjoyed it’s first rate cut in years.
Well, the August figures are now in and across the Region the average residential sale price fell again but this time a very modest $1,280 or 0.19%. That in contrast to last years July to August drop of $37,048 or 5.16%. I wouldn’t read too much into the differences between 2024 and 2023 for August however. Taken together, the first two months of the second half of 2023 saw a decline of $56,141 while the same two months of the second half of 2024 registered a decline of $55,336. Pretty much identical.
I believe for the balance of the year we’ll follow the pattern of last year where we saw a continued decline in average prices over the balance of the year, however, not as severe a drop. I expect we’ll see that pattern hold for the balance of 2024. I’m not expecting to see any surge in prices until next spring. The one wild card however is interest rates. We’ve seen three consecutive monthly cuts in interest rates with more forecast in the months ahead. At some point we’re going to hit a point where money is deemed to be cheap enough for people to rush back into the market. And that of course will fuel an upward surge in prices. At what point that will happen remains to be seen. But I do expect that to happen by next spring if not before.
The other interesting thing to note about the price trends in August 2024 is that in 7 of the 10 municipalities tracked, prices were actually up. Often in the past there were as many municipalities trending down as there were trending up. It gave a confusing and unsettled picture. Here, this past month with an insignificant drop across the Region of only $1,280 and with more municipalities up than down, it could be the beginning of a trend. Perhaps the market is responding to rate cuts, combating the slide inherent in the fall. Next month’s numbers will be interesting to follow.
Shifting our attention to unit sales, there is no real surprise here. August this year registered 515 residential transactions compared to 529 in July. A drop of 14 units. Last year by contrast the unit sales were actually up by 3, from 540 to 543, but overall, we saw a steady decline in activity each month to the end of the year. That’s just a seasonal reality.
What is interesting however, St. Catharines, the largest municipality in the region saw unit sales rise by 35 units or 30.7% in August along with a corresponding price increase of $15,638 or 2.40%. Not sure if that is just an anomaly or if it is a trend. One of the many things to watch moving forward into the balance of 2024 and beyond.