A Number-Crunching Overview of Real Estate of the Last 19 Months
Numbers, numbers, numbers. That’s all the talk these days in real estate circles. Will real estate prices continue to drop into 2023? I want a crystal ball but until I find one you will hear, “Yes, they will!” No, heck no!” and “Maybe, only time will tell.” I play the “maybe” card, but we can agree to disagree and let’s face it — nothing will ever be the same as it once was.
Let’s Take a Look Back, Shall We?
I’m going to conclude that this so-called pandemic did a number on buyers and sellers. The massive spike in pricing was so outrageous that folks today may not have a sense of “what makes sense” in terms of market pricing. “Oh, look! Prices are dropping.” Yes, they are. But to what levels? You have to ask THAT question because if you mention to a first-time buyer that prices are “dropping,” he or she will say, “Ya, whatever. I still can’t afford to buy.”
So, to put things into perspective, let me showcase some historical pricing in my town, Wasaga Beach, one of South Georgian Bay’s developing destinations that has followed the market trends of other communities in the area such as Collingwood. Allow me to preamble what follows by saying that Wasaga Beach ONCE WAS an affordable place to buy early in the days when the “move north” was just beginning. That was the mid-90s but I’m not going back that far. Wind things back to 2013…
The average price for a single family home in 2013 was $247,838
Nine years ago, friends. That was the number based on the April market update (InfoSparks/itsorealestate.ca). In 2014? $284,445. That’s a 14.7% jump year over year. That was a lot back then but we need to consider that Wasaga Beach was growing exponentially at the time so price jumps would likely have exceeded the norm. Moving on:
2015: $302,309 (an increase of 6.3% from 2014). Yes, that’s more like it.
2016: $327, 609 (an increase of 7.7% from 2015). Again, pretty normal.
2017: $455,468 (an increase of 28.1%!) What, the…
The (Short-ish Lived) Real Estate Boom of 2017
Ok, so if you recall we had a mini boom back in 2017. I say “mini” because pricing was still considered affordable, even though prices jumped almost 30% from 2016. It also lasted about a year or so with a less erratic price escalation.
2018: $437,644. What? Prices dropped? Holy mackerel. Yes, that’s what happens after a boom. When you crunch the numbers, it works out to just $17,824, or a 3.9% drop from the year before. Normal. Manageable. Palatable. Agreed?
And Then Things Go Berzerk
The average price for a detached home in April 2019 was $496,679, an increase of 11.9% — frisky, yet still on the acceptable side of normal in a growing town. And then within a year, everything was about to change: $537,472 in April 2020; $828,389 in April 2021; and then the grand peaking at $923,929 in March 2022 just before the series of price drops began. Prices in April 2022 were down to $821,314.
Enough said. Gong show. At this point, why talk of percentages because “ridiculous” will just about say it all. The point I’m trying to make is that even with this upswing and downswing in pricing over the last two and a half years, single family homes in Wasaga Beach have reached an unprecedented level, regardless of what or whom you blame it on. The same can be said for condos, by the way.
What Does All This Number Throwing Mean, Max?
It means real estate is no longer affordable in Wasaga Beach, no matter how you slice it. As of August 2022, the average price for a single family home was $715,950. Wow, better than $920K but still out of reach, considering we were at under $500K three years ago at this time. When all is said and done and we look at this 19-month pricing rollercoaster, prices increased 30.6% from April 2019 to August 2022.
But wait, is this pricing spike really all that bad?
Let’s take a similar historical timeframe and compare the 19-month period from April 2015 to August 2018, factoring in the “boom” of 2017: the average price in April 2015 was $302,309 and by August 2018 (19 months later), it had risen to $423,324. That’s a 28.6% increase. Hmmm, almost the same!
But even with an almost 30% hike in pricing in this block of our recent history, the market then was different; it was more inclusive and balanced and healthy. First-time buyers could still make it work. Even those considering a lateral move or a slight upgrade could pull the trigger to list and buy. Today, that’s not the case. Like I said, the recent past did a number on us and real estate was part of that collateral damage.
Where Do We Go From Here?
Will real estate prices continue to drop? I hope so because the numbers popping up every month on my system are not making me warm and fuzzy inside. Listings are increasing, sales are down, and even with current pricing in a state of semi-paralysis, the energy out there isn’t what it used to be. Pricing is better than it was but it has left a scar on this market that may never heal properly. You want to call this part of the “new normal” the media yaps about? Ok. Your call. It’s going to take a lot more than rising interest rates to drop prices to what people will deem acceptable.
2019, we all miss you. Please come back.
Photo by Jacques Bopp on Unsplash
