It will come as no surprise that housing prices have settled in the past few months. Rising interest rates and the resulting consumer hesitation have combined to create a real estate landscape very different from the trend of the past two years.
Let’s call it the new normal.
The question is, which segments are seeing the most significant price drops? Let’s look at what has transpired in Halton and Peel regions since the peak in March of this year, as an example.
Detached
The average price of a detached home in Halton region in June 2022 was $1,610,579 as compared with March’s $1,913,204, a 19% decrease. Most of the hit was taken in Milton and Oakville, with detached sale prices correcting between 22 and 26 per cent. Burlington remained essentially flat over the 3-month period, no price change at all.
Peel region fared slightly better. The average price of a detached house in June was $1,424,811 versus $1,675,480 in March, a drop of 17.6% over the three month period. Most of this was seen in Brampton which showed a 26.4% sale price decrease compared with a slight drop in Mississauga of 9.4%.
Freehold Townhouse
Townhomes also saw a price decline since March of this year. Halton showed a 19.8% price decrease in freehold towns, and Peel came in similarly demonstrating a 19.2% price drop.
Condo Townhouse
We’ve separated out condo towns because of the substantial price difference between freehold and condo.
Condo towns also saw a price decrease in the 3-month period since March. Halton prices came down 18.3%, and Peel saw a slightly larger drop by June at 18.8%.
Condo Apartment
Condo apartments fared the best out of all the segments. Halton and Peel saw price decreases of just 10.2% and 12.2 respectively for this housing style between March and June.
But fear not, it’s not all doom and gloom out there. Experts tell us that “despite the shorter-term impact of higher borrowing costs, housing demand will remain strong over the long-term.” (TRREB, 2022).
This is a direct result of the fact that homes are still in short supply relative to those who need it.
According to TRREB President Kevin Crigger, “home sales have been impacted by both the affordability challenge presented by mortgage rate hikes and the psychological effect…[in which] buyers have put their decision on hold to see where home prices end up.”
Crigger (2022) goes on to say, “Expect current market conditions to remain in place during the slower summer months. Once home prices stabilize…buyers will re-enter the market despite higher borrowing costs.”
Our conclusion from this brief analysis is that prices have corrected as much as they’re going to. The next few months will likely be a plateau as buyers and sellers recalibrate their expectations.
Buyers will be getting their arms around the new normal, which means witnessing housing prices lower than we saw in January of this year. These lower prices will be offset by higher borrowing costs.
At the same time, home sellers may pause their plans to sell while they wait out the market, reducing the number of homes available for sale. This could result in a return of tighter market conditions.
Stay tuned in here for further updates as these market conditions continue to unfold. And if you have any questions about what the real estate market is doing where you are, please get in touch with us today.
References:
Toronto Regional Real Estate Board (2022). GTA REALTORS® Release June Stats
https://communications.torontomls.net/mlshome/download.php?link=market-stats/market-watch/mw2206.pdf
Toronto Regional Real Estate Board (2022). GTA REALTORS® Release March Stats
https://communications.torontomls.net/mlshome/download.php?link=market-stats/market-watch/mw2203.pdf
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