The busy market season seems to have been delayed this year. Likely due to winter not wanting to quit! At the end of May we saw some warmer days and I think the sun even came out once or twice. And did that ever unleash pent up Buyer demand. Home sales picked up with 694 sales in May, Up 11% vs April.
Here is how those sales break down:
Single Detached Sales: 429 UP 2.6%
Condominium Sales: 68 Down 23.6%
Townhome Sales: 137 Down 4.2%
Semi-detached Sales: 60 UP 36.4%
That pent up demand hit the market and helped to drive the average home price up 10.6% versus the same month in 2018 to $534,348.
Single detached average price: $623,289 UP 9.1%
Condominium average price: $332,309 UP 11.3%
Townhouse average price: $402,426 UP 9.8%
Semi-detached average price: $432,207 UP 9.3%
The median price also keeps rising with that number now sitting at $495,000 and increase of 11.2% vs May 2019. See below:
Supply and Demand
We continue to see high demand and competition for homes under $500,000 because there are so few available. In the last few weeks we have noticed an uptick in the demand for homes priced over a million dollars. This price category felt weak – likely due to macro economic information causing some nervousness and because these Buyers typically fall into the “like to move” category rather than “have to move” category where the decision process can be a little longer and weather that is more conducive to getting out to see homes is more pronounced.
This year it seems that the seasonal busy season has been pushed out. Weather is the obvious reason, but I can’t help thinking that Buyers may have been pushed out of the market or decided to wait and save more when interest rates started to get up into the 3.7% to 4% range. Those rates snapped back very quickly down to around 3%. I think that because of how quickly it happened that there was an adjustment period: those that had stopped looking to buy had made that decision and perhaps weren’t looking at rates as closely and perhaps it took some time for rate information to makes its way back to these buyers. A 0.8% rate change is a $164/mth (almost $2000 per year) payment difference on a $400,000 mortgage. On an $800,000 mortgage the difference is $327/mth (almost $4000 per year). These are big differences, especially when you consider getting bank approval for these mortgages. These buyers have come back and we’re seeing it translate into market strength. I anticipate that June will be another strong month before the typical summer slow down.
See, I can be positive: I’ve shelved my pessimism for two full reports now!
From an investment standpoint there are great opportunities in some small single detached homes: price points are good and tenants are plentiful. Also, pre-construction condos are still my favourite: there is a new 30-unit Boutique development right on Victoria Park that is very exciting. And we should hear about some new stuff available at the end of the summer. In addition, higher priced homes are a great buy right as prices have paused and in some cases have come back a bit. We have new construction in Carriage Crossing – the final phase with beautiful homes starting around $1,250,000.
Let me know how we can help. Happy to chat.