If I was to pick three measures (metrics) to most accurately reflect today’s real estate market, those would be:
Months of Inventory - velocity of sales compared to inventory
Simply, Inventory is how many homes (Active Listings): Answer: 901
Sales - How many homes were sold in most recent month: Answer: 137
Dividing Active Listings/Sales gives M.O.I. Answer: 6.6 Months
If no more listings came on the market, it would take 6 1/2 months to deplete the current inventory to 0.
To determine where our real estate market is in the cycle, these guidelines provide the best prediction of where the market is going:
When Months of Inventory (M.O.I.) is less than 4 months = Sellers Market (2020 - 2021 - Spring 2022) Prices Rising
When Months of Inventory (M.O.I.) is between 4 - 6 months = Balanced Market (Summer 2022 - Summer 2023) Prices Flat
When Months of Inventory (M.O.I.) is greater than 6 months = Buyers Market (October, 2023) Prices Declining
Comparatively, at the peak of the market in 2020 - 2022, there were less than 1 Months of Inventory and Sales were north of 300 homes per month on average in our QDAR area. That’s why prices were increasing at 30% + per year over this time period when we enjoyed an unprecedented increase in home values — an anomaly during this time period where "A rising tide lifts all the boats" is quite appropriate for our fabulous Bay of Quinte & PEC area.
Realistically, increases in home prices of the magnitude we saw in 2020 - Spring 2022 will not return anytime soon, especially with the current interest rate environment faced by Buyers and anyone renewing a mortgage.
With the current 6.6 Months of Inventory, we are technically in a “Buyers Market.”
The real estate market is very localized, so each area can differ dramatically. 6.6 Months of Inventory is for all of the Quinte and District market (including all of Hastings County, Bay of Quinte and Prince Edward County). There are big differences between geography, type of home (detached, condo, townhome, waterfront, etc.) urban vs. rural.
Quinte & District - Residential Market Activity
Sales in Oct, 2023 were 137 units, a 36.9% decrease from October 2022.
The average price of homes sold in Oct, 2023 was $563,388 a decrease of - 11.2% from Oct, 2022.
The residential house price index (HPI Index) saw a decrease of - 0.7% compared to Oct, 2022 for Quinte & District.⠀⠀
Not all listings sell, which is reflected in the Sales to New Listings Ratio which is currently only 40.9%, down from 46.7% Oct. 2022 and down from 83.8% in Oct 2021. Therefore, less than 1/2 of current listings will sell, keeping inventory on the market for longer.
Active Listings numbered 901 units on the market at the end of Oct 2023, equating to 6.6 months of inventory. This change from 1.1 Months of Inventory in 2021 (strong Sellers Market) and 4.1 M.O.I. Oct, 2022 (Balanced Market) has shifted again towards a Buyers Market today where Buyers have lots of choice and more time to do due diligence and make a prudent well researched decision.
Both The Bank of Canada and the U.S. Federal Reserve held interest rates steady over the past few weeks maintaining the “higher-for-longer” mantra for interest rates seen on both sides of the border. In Canada, The Bank of Canada maintained its Overnight Bank Rate at 5.0% on October 25, 2023. Similarly this past week, the Federal Reserve's rate target remains at 5.25%-5.5%. Economists are optimistic that rates will start to decline in 2024, but the consensus is that we may not see a shift until mid 2024. This has a direct impact on borrowers, both new buyers entering the market and those renewing mortgages.
Globe & Mail - November 2, 2023 - Jason Kirby
Canada’s economy faces $900-billion mortgage renewal shock
Between 2024 and 2026, an estimated $900-billion worth of Canadian mortgages – almost 60 per cent of all outstanding mortgages at chartered banks – are due to renew and could face a sharp increase in payments, according to a report released this week by RBC Capital Markets. ⠀⠀
To really understand your local market, you need a seasoned and experienced realtor that understands these differences and the market nuances and is not afraid to get into the weeds to simplify and articulate today’s complicated market for you.
IT’S TIME FOR REAL MARKET INSIGHT AND A FREE MARKET UPDATE ON THE VALUE OF YOUR HOME
CALL KIM TODAY | 613-968-0251