I cannot believe that it’s December already and that this will be my last memo for 2023. I enjoy contributing these monthly columns and appreciate the opportunity to share my thoughts with you.
To say that 2023 has been a challenging year for real estate is an understatement. The statistics for November were published this morning, and the 4236 sales reported through the MLS represent a 6% decline from the previous year. Active listings were up 40% year-over-year and the months-of-inventory has hovered around 4 months for the last 90 days. Total sales for the year are currently at 62,575, which projects to be about 10,000 less from 2022, and the lowest sales volume since 2000.
So, how can this be? We continuously read about the overwhelming demand for homeownership fueled largely by record population growth, and extreme supply-side challenges facing the market, which has kept pricing in check. Both of these factors are true.
However, I do think the big story heading into 2024 is pricing. If you are listing your home for sale today, price is crucial. The slightest overprice is going to have a property sitting on the market. I really can’t think of a time, other than Q4 2008 /Q1 2009, when pricing was more important. If you are even slightly ambitious, your home will likely sit.
The demand is there. A couple of months ago, we wrote about CentreCourt’s Pickering City Centre development. They sold 95% of their building in a week, but the prices were 15% to 20% below the previous condo launch in the area. In real estate sales and marketing, price is the key driver of success.
If we look at this month’s MLS activity, you’ll note that only 6% of all home sales this past month were over $2,000,000. At the peak of our market (February 2022), that same figure was 12%. This past month, 70% of sales were between $600,000 and $1.5M, up from 50% in February 2022.
With the market so sensitive to interest rates, buyers and sellers have been in a standoff for more than a year, but we are now in a buyer’s market. Sellers that are holding onto prices from a year ago are doing themselves a disservice. I believe they will be chasing the market downwards over the next several months, and ultimately selling for less than they would today. This will cost sellers both time and money in the process. Rather, it would be prudent to get ahead of the curve by pricing for tomorrow instead of for yesterday, and getting a deal done today. In many cases, some of the difference can be made up on the purchase side, if you are buying and selling in the same market.
As a final thought, I do appreciate how affected everyone is in some fashion by the state of world affairs, by the war in Israel, and the ongoing war in Ukraine. These are difficult times. As we turn the calendar to 2024, I pray for peace, and I wish nothing but health and happiness for you and your families.
As always, I would encourage anyone reading this to reach out to me at (416) 723-2383, or to contact a member of the Harvey Kalles sales team. We have been in business since 1957 and can provide expertise on the housing market.
