A study in contrasts

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This article was published 14/01/2023 (1186 days ago), so information in it may no longer be current.

Winnipeg’s 2022 housing market was a tale of two halves.

Through the first six months, a hot start that had carried over from the preceding two pandemic years — described as the “Armageddon era” by one realtor in an interview with the Free Press — saw few listings but a strong demand across the city. It was a seller’s dream, with multiple buyers offering above the listed price within days of a home being available, ultimately creating bidding wars and driving the final price up.

In June, however, that came to a quiet yet abrupt halt.

“When I say blindsided, I mean blindsided,” said Nicole Hacault, an 11-year realtor with Royal LePage. “From consumers to realtors, all of a sudden we were like, ‘What just happened?’ It wasn’t like we heard everybody saying we’re going to slow down or anything like that. It was a really silent shift. It’s almost as if everybody got together secretly behind our backs and decided they were doing something at once.”

Hacault said it was the first time she had seen the market in that state since late 2019, just before pandemic-related shutdowns came into effect.

“It was just that all of a sudden the multiple offers weren’t happening and the days on market started increasing. So you went from having 15 to 20 offers on a house to one or two,” she said.

The average price of a single-family detached home had jumped from $390,000 in the fourth quarter of 2021 to $407,700 in the third quarter of 2022, according to a recent Royal LePage National House Price Composite. The market shift at the halfway point of last year drove the average price back down in the fourth quarter to $393,800.

The market had cooled significantly in comparison to 2020 and 2021, which operated at record-breaking rates. For perspective, in 2019, the city saw 13,662 MLS sales. That skyrocketed to 16,033 then 18,575 in 2020 and 2021, respectively.

While the slower back half of 2022 didn’t shatter any more records, it did finish as the third-highest sales year with 14,660 sales and second-highest in dollar volume ($5.4 billion). The top three areas of the city with the highest number of sales for residential detached homes in 2022 were Bridgwater/Waverley West (336), West Kildonan (236) and Riverpark South (220).

Jeremy Davis was quick to put a positive spin on the normalizing market.

“I know some folks maybe saw that in the news, about sales declining, maybe saw that as a bad thing. But it really was a good thing because it brought our market back into balance and that’s really where we want to be because it offers both buyers and sellers an equal opportunity at getting a fair price,” said Davis, MLS market analyst with the Winnipeg Regional Real Estate Board.

Davis equated the first half of 2022 to years ago when he was a first-time home buyer with a limited budget. He said the competitive market led to many people being boxed out in bidding wars.

“If you put yourself in the shoes of someone looking to buy a residential detached home and we’ve got two and a half years of unsustainable growth — multiple offers, high sales, not many listings on the market — and then you add in things like inflation, interest rates… a lot of factors there that can lead people to re-evaluate their own financial situations,” he said.

As a result, Davis explained, condos became the beneficiary.

A residential detached home in December 2022 cost $378,978, whereas a condominium came in at $243,749 — a difference of more than $135,000. Davis said that difference makes it easy to see why many people have opted for the more affordable option, even if that means they sacrifice a bit of space.

Condominiums saw the second-highest number of sales (2,184) and dollar volume ($577,695,298) on record in 2022. The most sales came in 2021, which saw 2,572 sales total $630,029,367. The most transactions came from Crescentwood/Osborne Village (197), Linden Woods/Linden Ridge (131) and Downtown/Exchange (113).

“It’s the first time in my career I’ve been excited to have a condo listing,” Hacault said. “Before, it might be a six-month journey to sell your condo, and now you can sell a condo in a week or two, in a lot of areas.”

Davis expects the trend to continue in 2023 as the baby boomer generation and empty nesters continue to look to downsize across the city.

“All things being equal? Yes,” Davis said. “The data shows there’s no reason to think that will change, at least in the first part of 2023,” adding he’s heard rumblings within the industry about some larger developments in the works that could be erected to help with supply.

“What I can say is if we see the trends we saw in the second half of 2022 continue — this is the inventory replenishing and maybe even rebounding a little, as well as sales staying in a similar trajectory — we should be OK in 2023. And we’re really looking at hopefully a return to what things were like before the pandemic began.”

Hacault echoed Davis’s sentiments, saying some of the leading predictors are that the market will yield a “normal” spring.

“Normal was, some houses are going to sell really fast and we’ll get a couple of offers, and others are going to take a little bit longer to sell,” Hacault said.

“We have a very depleted inventory right now. The cause of the market is also supply and demand. So we have a very low supply and we are building demand right now. There’s a lot of buyers that are getting out there and getting ready to buy, so I think we’re gonna see a little bit of a surge. Some houses might sell 20 or 30 (thousand dollars) over (listed price), some will sit a little bit longer and it’ll be fine.”

Hacault offered a parting message for consumers looking to buy or sell in 2023: “I think the main thing as a message to get across to people is to just not be scared. You can never perfectly time a market for when you’re making a decision to buy or sell. It’s a decision that has to match your life and what’s right for you and to get less hung up on rates and what the market is doing,” she said.

“It’s still a great market, it’s just different than what we saw in the last two years.”

jfreysam@freepress.mb.ca

Twitter: @jfreysam