Market Snapshot – January 2023

One month into the new year and we are already seeing signs of a strong housing market in our city of Cambridge, Ontario.

Last year, in January there were high housing prices due to low interest rates, low inventory, high demand and fewer barriers to entry. By year end things had changed dramatically, closing the year out with the least amount of new listings for the month (88, high of 410 in April), as well as least numbers of sales (72, high of 249 in March). So, when I say the year started out strong with home prices hovering around a million dollars, and then being in the low 700,000s by year end, would be an understatement.  *(These numbers reflect all residential homes in Cambridge as per ITSO. InfoSparks © 2022/2023 ShowingTime).

However, if you were to look at the year without comparing it to other years you would be left scratching your head as to why the dramatic shift.  You would have to go back a few years to start to unpack this and first look to a growing population (demand) and a lack of housing (supply).  This unbalanced market only heightened as borrowing costs continue to dip making it easier to justify going into debt, as the appreciation would outweigh the low carrying costs.

Everything seemed hunky dory until people started noticing our inflation rate, which simply stated is a rise in prices which results in the decline of purchasing power. So, as people began spending during the pandemic the inflation rate continued to rise and it became apparent that there could be detrimental ramifications if not addressed.

This is the part in the story that the Bank of Canada comes into flex their muscles and save the day.  In order to squash the hemorrhaging wallets of Canadians, something needed to be done, so those low interest rates we loved so much began to rise.  Slowly throughout the year marginal increases were made to the rate which took time to actually be reflected in Canadian’s spending habits. So, as we enter a new year with interest rates higher then this time last year, we also see a change in the housing market.

 

No longer are prices close or over a million dollars for a single detached home in Cambridge, they are now just over $800,000. We are still in short supply of new inventory but demand is still there, people are now more cautious about over spending and are selective in what they spend their money one.

As we look ahead, I think many people are apprehensive to share their thoughts on what the housing market will look like in 2023.  But as a Realtor® it’s my job to study and know the market, to keep my finger on the pulse and to be informed with monetary policy, mortgage rates and the economy. I tend to share a similar sentiment as the recent 2023 Royal LePage Market Survey Forecast. highlighted, and that is that though we have seen a drop in prices, a rise in interest rates, we still continue to have a shortage of homes to meet the needs of our communities. I expect that 2023, though it won’t be as extreme as the height of the pandemic, I do expect we will continue to hear a similar story.

If you want to discuss what’s happening in the market, or maybe the process of buying or selling, I am always ready to have that conversation.  All you have to do, is reach out by filling out the form below and we can chat more over coffee. And be sure to follow me on Facebook or Instagram for all the behind the scene and up to the minute news.