For the fist time since September 2019 we have seen average prices for all property types decrease in comparison to the month prior.  While they are not significant drops in price, detached decreased by 2.4%, townhomes by 1.4% and condos by 1.1%, the fact that prices are decreasing in May is very indicative of a shifting market.

This does not really come as a big surprise when looking at May 2022 stats as sales have dropped quite significantly.  May 2022 saw 17% fewer sales than April 2022 (in the past 10 years May has had more sales than April every year except for 2016) and sales were down 54% compared to May 2021. In all, May 2022 sales were down 28% compared to the May 10 year average.

May 2022 saw a total of 3,422 new listing on the market, and finished with a total inventory of 5,627 homes available for sale. The inventory crisis we experienced in the first half of the year is gone and total listings are falling in line with where we should be for this time of year.

If we combine the total number of homes available as “for sale” and the total number of sales processed in a given month, we come up with what is called the “Sales to Active Ratio” which gives a very good indication as to the type of market we are in.  Anything above 20% is considered a sellers market, 12-20% is a balanced or neutral market, and below 12% is a buyer’s market.  May 2022 finshed with a ratio of 23% down compared to April 2022’s 30% and May 2021’s 51%.  While we are still technically in a seller’s market, it is a much weaker seller’s market than we have been in for several years and could indicate that we are headed for a more balanced market. 

It seems, for the time being anyways, that we have shifted to a more post pandemic state of life and work, and with that, the shift to work from home has certainly dwindled.  Pair that with rising interest rates and we have a lot of explanation for the shift in the market.  It is of course more nuanced than just those two factors, but those are two of the obvious ones that have changed recently.

So, what does all this mean for you if you plan on making a move in the near future? Well, it really depends on what you are planning to do.

If you are considering selling your home to move to a larger one, everything is relative. Your home has likely decreased in value and will take longer to sell, but the same is true for your next home also, making the market shift somewhat of a moot point. 

If you are looking to just sell your home, it is still a decent time to do so.  Despite the fact you may not set any records for sales price in your neighbourhood, home prices are still higher than they were only a few months ago. One key aspect to consider while selling your home in a decreasing market is to stay ahead of the market.  What I mean by staying ahead of the market is that we have to recognize that prices are on the decline meaning your home will likely be worth less in a month than it is today.  Because of this, we cannot base our prices on what happened last month, instead we have to look forward to what is likely to come next month. If you lower your price every month based on the previous months prices you will likely have your home on the market for quite a long time with several price reductions, only to wish you had sold a little bit lower than you would have liked a couple months earlier (at a higher price than you will get after chasing prices down for a few months).

If you are looking to just purchase a home, it may surprisingly still make more sense to do so now than to wait. It really depends on how much of a mortgage you are going to have and what will happen with interest rates. If rates continue to rise, your monthly payments could actually go up despite the fact that the sale price has dropped.

All in all, the real estate market is a complex market with many factors determining what will happen. It is more important than ever to have an agent working for you, so if you are planning on making a move in the near future, be sure to reach out soon so we can start making a plan to make your move as stress free as possible.