Vol. 6:1 Disturbance in the Force: Winnipeg Market Update
Disturbance in the Force: Winnipeg Market Update
A softening of the market might be just beginning. The number of sales in May 2022 was down from May 2021 (1723 vs 2000+) but May 2021 sales broke records, so take headlines about the “declining” real estate market with a grain of salt.
Average Sale Price One Year Later Although the number of sales was down, they nevertheless added up to the highest dollar volume on record due to a jump in average sale price of over 100K!
In 2021, the average sale price of a Winnipeg single detached house in 2021 was $345k. As of May 2022, that number is over $100k higher at $454k.
Disturbance in the Force In the past couple/few weeks, some unexpected scenarios have unfolded here and there.
Take the St. James neighborhood of Jameswood for example. Over the past several months, sales of 2 bedroom bungalows with garages were routinely selling in the $340-350K range with multiple offers. So it was a surprise when 3, 2-bedroom bungalows hit the market in the same week with one selling under the price, one over but not nearly as much as anticipated, and one languishing. What’s happening? One of the key drivers of the acceleration of sales prices has been scarcity of homes coming to market – we have had record low inventory since the March 2020.
In April, listings were down by 19% over the year before, a time which already had record-breaking low inventory. Buyer demand has remained strong so you can imagine house fierce the competition has been for those few listings.
May, however, saw a significant influx of new listings – 29% more than the month before, and 5% more than we had this time last year. More properties to choose from means fewer offers for those properties on offers day and fewer offers means sale prices don’t get pushed up so high.
We would have to have double the listings we have now in order to move from a sellers to a balanced market, but even this small gain is having a dampening effect on sales prices. Not in every price range, mind you.
A Market Share Reversal Until very recently, the greatest numbers of homes sold in the lower price ranges. For example, last year, 20% of sales were homes in the 0-$250K range. This year, that has been reduced to 11%.
This does not surprise me. The meteoric rise in prices means that the entry level prices increasingly represent housing with very low value propositions and buyers shopping in these lower ranges must increasingly discriminating. On the other hand, the $700K-$1 million range, which usually comprises only 4% of homes sold, is now sitting at 7% - almost double!
What about condos? The condo market continues its comeback as buyers edged out of the single detached home market turn their sights on condos instead. The most active price range is between $150K and $199K at 28% of the market, which makes sense given that pretty much any single detached home available in this price range would be a teardown at worst and a gut job at best.
That said, the number of condo sales between January and June 2022 is down approx. 10% over the same time last year and there was a significant increase in the number of listings in May over the month before, increasing choice for buyers in this market as well. With that expanded choice comes a dampening effect as well.
Implications for Consumers Buyers in some areas of the market will be relieved to have a little less competition and sellers must pay careful attention to details of property preparation and grooming if they wish to attract the buyers willing to compete, pushing that sale price up in the process.