|Well, we survived May, and now are on to June. I truly hope you and your family are staying safe and healthy during this unprecedented time, and are finding ways to navigate the world.
The Coronavirus lockdown and associated fears were in full effect for the entire month of May, with some signs of light beginning to show at the end of the month. Cautious optimism is returning, people are leaving their homes (albeit wearing masks and armed with hand sanitizer!).
I have had lots of people call me, wondering how this whole situation has affected their real estate value. They read negative headlines from the CMHC about major market corrections (up to 18% reduction in property values were forecast by our national housing agency!!??), and they wonder how that pertains to them.
As always, I urge calm. If you think about the reasons why people need to buy and sell homes, those reasons continue, despite the coronavirus. Let's look at a few:
- Marriage (yes, weddings are suffering, but people ARE still getting married)
- Children (houses get small fast when plastic toys are involved)
- Separation / Divorce
- Smartsizing (spending 3 months in your home may realize it's too big, or too small, or is missing a key feature)
- Investment (Investment real estate, despite the provincial government's best efforts to destroy it, remains a viable investment for certain individuals).
- Death / serious illness.
These are just a few of the reasons why people still need to make moves.
In terms of dire forecasts from CMHC or other pundits who stand to GAIN from decreasing house prices? I'd like to remind you what happened in 2008/2009 during the financial crisis. Do you remember how everyone was freaking out that the bottom was going to fall out of the real estate market? Well, according to my records, based on woodstock-ingersoll district real estate board average sale prices, the average sale price in Woodstock went down a whopping 1% in 2009. Even if this correction is five times worse than 2009, that represents a 5% reduction in real estate values, which, translates to roughly $25,000 at the average sale price of homes in Woodstock as of this month.
By the way, I don't think this is going to happen, but if it does, it will not be the end of the world.
Now, on to the report.
What happened in the Woodstock Real Estate Market in May?
Let's look at May's real estate numbers, which are showing marked changes, but overall, supply and demand remains stead, with just a slight shift away from an extreme sellers market.
Just FYI, this data is compiled by me, Ben Sage, using CREA monthly statistics reporting, and data on the Woodstock/Ingersoll district Multiple Listing Service (MLS®). If this data looks different than you've seen posted elsewhere, please note that I am looking at only Woodstock. Many of the local board and other agents' reports focus on the entire board area (which includes Woodstock, Ingersoll, Thamesford, Embro, Innerkip, Sweaburg, Hickson, etc).
As you will see, although demand has understandably dropped, supply has continued to be quite low as well, keeping average sale prices relatively steady.
In May, the average residential property sold for $481,472. This is WAY UP. 23.2% from last May. This is the highest average monthly sales price I have ever seen. This includes all non-commercial transactions taking place within the city of Woodstock, and logged on the MLS®.
There were only 32 residential sales on the Woodstock Ingersoll District Real Estate Board MLS system in May 2020. This was down an absolutely astonishing 67% over the number of sales in May last year. It was UP from last month though, which had 29 sales.
In terms of detached homes (non-condo's with no common shared walls, floors, or ceilings), the average price for this type of home was way up, by 23%, to $513,513. This was up significantly from last month as well, where it stood at $434,491.
The number of active inventory at the end of May was ONLY 77. This is WAY DOWN from 153 at the same time last year, a decrease of 49.7% from the same point last year, and this trend has been the dominant factor in the overall market trend for the past several years.
Average days on market remains quite low. The reality is, right now in the marketplace, there are not many people simply out looking. If they are out shopping, they are buying. If they are listing, they want to sell. This is causing Average Days on Market to stay quite low (although it is up from last year, this remains quite low by long term averages).
Finally, the true measure of the trajectory of the market lies in how supply relates to demand. I have charted this particular metric for the past 10 years. Recently, it has shown a measurable trend of supply dropping versus demand. The lower the line, the less supply exists relative to demand. We hit a ridiculously low 0.82 months of inventory at the end of February 2020. This was right in line with the supply/demand situation at the end of January. Things began to change a little bit in March, although less than many have feared.
The picture of supply vs demand is always the number one factor when it comes to the market trend. If you are concerned about YOUR home's value, this is the information to watch. If supply becomes too high and demand stays low, you will see prices soften. If you see supply really drop off, and demand stays constant, prices will continue to climb. This month supply and demand both dropped, almost the same amount (Supply down 49.7% and Sales dropped 67%), so sales prices have so far held on.
Supply relative to demand has continued to soften slightly since the beginning of the coronavirus lockdown. At the end of May, we were sitting at 2.41 months of inventory (that means that if no more houses listed, and demand stayed constant, we would run out of houses to sell in 2.41 months.) This is still firmly in a sellers market, and explains why we are still seeing sales prices remaining strong on sold listings.
What if you need to make a Real Estate move?
Most real estate agents in our area are reporting that business has slowed right down. With the number of transactions way down, it's no wonder that it feel a bit "slow" for this time of year. But the reality is, sales are still happening. People still need to sell. People need to buy. Things are moving along.
Do you need to sell?
As always, a professional marketing plan that targets local agents and buyers, as well as out-of-town agents and buyers is paramount in achieving the best exposure for your property. More exposure means more buyers, which means a quicker sale, for the most money possible. For 13 years I have been helping sellers navigate the current market conditions, and although unprecedented, this market is no different. The focus on marketing property currently is on creating the best possible digital materials (which I have been doing for my clients my entire career). We include high quality virtual tours (example: https://my.matterport.com/show/?m=3SAXFNRZ4y8), and high quality hosted video tours (example: https://youtu.be/I5Ser9GLPv0).
Another important note is that the the fundamental systems required to close transactions have adapted and remain robust. Land registry (registering your sale or purchase) takes place online in almost every case, and therefore can be done without face-to-face contact. Law offices have adapted by adding digital signature platforms, and video meetings instead of face-to-face meetings, and banks seem to have access to more than enough credit to continue through this crisis.
Do you need to buy?
Fortunately, many agents are now stepping up their game to include high quality photography, video tours, and virtual tours. This gives home buyers a chance to thoroughly examine the property they might be interested in before booking a showing.
If you'd like to book a virtual showing, that's possible too! The way that works is, you let Janice or I know that you're interested in a property, we can do a bunch of research on it to answer any questions you might have about it, and if you are still interested, you can send one of us through the house for you, and we can show it to you using a video tour (skype, facetime, zoom, etc.). This isn't quite as good as being there, but you can still get a pretty good idea how the house looks, and your trusted agents can tell you what they see, that might not be visible over the video. You can also get a look at things that might not be prominently featured, or even noticeable on the video tour.
If you want to proceed, you can make an offer conditional on physically visiting the home, or you can book a walkthrough before we make an offer.
We have ways!!
What does the future hold?
Well, if you have been reading my reports for any amount of time, you know I am quite shy about predicting the future, and this situation is not much different.
My prediction for the market? Volume will continue to be low. As you have seen, in May we sold almost 70% fewer homes than last year. Prices may adjust downwards for a period of time, but since this pullback is not led by credit or real estate overvaluation, I don't expect it to be severe. We depend a lot on immigration to drive our real estate values, and with movement between nations in unknown territory, the effect on our market will be noticeable if the closed borders persist for long. One thing I am confident in, is that real estate will be one of the sectors that leads the recovery, when that happens. Once again, people need shelter. With money remaining cheap to borrow, people will choose to upgrade to their dream homes, investors will see value in long-term buy-and-hold strategies, and things will be alright in the long run.
Do you need to sell? Do you need to buy? We have strategies to accomplish this, even in these trying times. Give us a shout and see if we can find a plan that works to accomplish your goals, and keep you as safe as possible.
During this period of uncertainty, if you have questions about the real estate market, something I didn't touch on, or how this information pertains to you and your plans, please give us a shout! We'd be overjoyed to hear from you!
The Woodstock Homes Team
Ben Sage, Broker (519-532-1295)
Janice Costa, Sales Representative (519-209-2678)
RE/MAX a-b Realty Ltd., Brokerage
Brokerage Independently Owned and Operated