Eric | Jan. 10, 2019
2018 proved to be a consolidation year. Buyers and Sellers were more evenly matched vs the two previous years. Buyers were not chasing homes and tended to have a more conservative approach to purchasing. Homes still sold quickly at an average of only 24 days on the market (vs 19 days in 2017). There were 11.1% fewer homes sold in 2018 (5823) versus 2017 (6549) however, the average price was very consistent from February to December of 2018 and resulted in the average price of all homes sold in 2018 ($483,537) up 3.4% versus 2017 ($467,549).
Caution and restraint by Buyers was in part due to a higher degree of understanding about the Real Estate market; most notably Buyers were aware of those who purchased homes in a frenzy only to be left with a property worth thousands and in extreme cases hundred’s of thousands below what they paid. Mortgage rules also acted to restrain prices paid and has helped to stop bidding wars where emotions caused excessive bid prices with confidence fueled by easy access to borrowed money – the new rules have curbed a lot of this.
Detached homes: 3355 (Down 16.2%)
Condominiums: 1553 (Up 6.4%)
Semi-detached homes: 416 (Down 23.6%)
Townhomes: 431 (Down 7.7%)
Average price of all residential real estate sold: $483,537 Up 3.4%
Detached home average price: $575,412 (Up 4.8%)
Apartment condo average price: $304,676 (Up 12%)
Townhouse average price: $373,307 (Up 5.5%)
Semi-detached average price: $396,391 (Up 4.7%)
It is clear to see that lower priced homes saw the greatest price increases in 2018.
The chart below gives us a look at what the average price has done each month over the last 2 years. The chart shows the fluctuations we saw last year with the peak in April as the Foreign Investment tax took affect. There was a lot of uncertainty at the end of 2017. Confidence crept back in and as mentioned 2018 saw more of a balanced feel.
The narrative going forward is much of the same: what will Trump do next? What will happen with trade negotiations around the world? What will happen with interest rates?
I’m not going to guess at the first question 😊 But, it is likely that a trade agreement between the US and China will materialize soon and hopefully that pumps some confidence back into the world economy. And I’ll answer the last question like a Banker: rates could go up, rates could stay the same or rates could go down – So horrible!…It is more likely than not that we will see some hikes, but I think they will be slow and cautious. Any further substantial moves will blow up the world – I hope there are some smart people that have their fingers on those rate buttons!
If you are looking to move or want to exit an investment property then I would suggest selling into the spring market: January to end of March. As can be seen in the charts above we always see seasonal strength at the beginning of the year (keep in mind that the numbers in the charts reflect closed deals – those deals actually happened 30-90 days prior). I would then look at purchasing something between April and June. Chat with your lender about porting mortgages and/or locking in rates that are available now.
As a buyer I would look at higher priced homes as they are better value than lower priced homes. Also, pre-construction condominiums are always a great buy and the returns and ease of these investments are great: you get a discount to market value and down payment and timelines are positive attributes. You will also see these properties continue to appreciate the fastest as seen above in the numbers. I would stay away from competing for resale condominiums and look rather to pick up a deal on a small single detached home.
Happy New Year!