Market correction

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This article was published 12/03/2023 (1174 days ago), so information in it may no longer be current.

Professionals in Winnipeg’s residential real estate industry say the market is right where it’s expected to be after February drew a spike in listings while offers remained ice-cold.

A recent report from the Winnipeg Regional Real Estate Board revealed 3,045 homes hit the market in the Manitoba capital last month, 67 per cent more than in February 2021 (1,822). Residential-detached homes accounted for 1,412 of those listings, a 96 pre cent increase from February 2021 (720).

February was also the eighth-consecutive month that inventory was higher than the same month in the previous year.

The demand didn’t match the stock, however, as February’s 657 sales are down 32 per cent from last year.

The stark contrast in numbers is hardly a surprise in a market that continues to correct itself from the record-setting numbers produced over the pandemic, according to Jeremy Davis, director of market intelligence for the WRREB.

“I would’ve been shocked to see any sales numbers for this February that weren’t lower last year’s,” Davis said. “We’re a seasonal market where sales typically decline in the fall and winter months and heat up in spring and summer.

“We’re in those ranges of the pre-pandemic years.”

Davis said when he analyzes the market going forward this year, he’ll compare it to the data from 2018-2020, before inventory shrunk and demand skyrocketed, creating heated bidding wars and a generous market for sellers. February’s sales are just four per cent below what 2018 produced and nine per cent less than 2019’s transactions.

The balancing market is possibly no more prevalent than in the cost of homes. The report from WRREB states the average price of a residential detached home in February was $375,063, 13 per cent below the $429,019 a year prior.

That aligns with the WRREB’s forecast of a four per cent decrease on home prices in 2023.

“Our prediction was that 2023 would start to return to the pre-pandemic levels. That’s still our prediction. Sales are down significantly over the record years of 2021 and 2022 but they’re not that far off the pre-pandemic years,” Davis said.

“Inventory is much higher than 2022 and 2021 but we’re still below 2020 and 2019 so there’s room for growth there on the inventory side. Those consecutive months where we’re seeing inventory rebound is a good thing in our view because it’s building up for that springtime when the market typically heats up.”

Meanwhile, the price of condominiums are expected to remain consistent with what buyers saw in 2022. The rich price tags on homes pushed many Winnipeggers to seek smaller, yet significantly more affordable condos instead by the second half of the year. That led to the second-highest sales and volume total on record for condos, with 2,184 transactions.

A market survey forecast from Royal LePage in December predicted condos will cost $243,082 on average, by the end of the year. And there’s little to worry about when it comes to inventory. A 2023 forecast by Altus Group predicted Manitoba will see 7,225 housing starts this year, many of those condominiums.

Though, an increase in inventory and a decrease in prices could put people back in the market for a detached home, according to Michael Froese, a managing broker with Royal LePage.

“A buyer, if home prices have fallen back into their price range, typically speaking, would prefer a detached home over a condo,” said Froese. “In the last couple of years, with the rising prices and multiple offers, we saw people go into condos, we saw people going into alternative housing types — townhomes, multifamily, duplexes — because they just couldn’t get a residential detached home.

“So it’s not so much the price decrease that has people going from condos to detached, it’s the fact that they can actually go buy a detached home right now without competing against 25 offers.”

Froese noted 75 per cent of homes were selling at or under list price in February. Rather than being concerned about any over-correction in the market, he said both buyers and sellers are entering murky waters, and that it could take some time to feel out what is expected to be the new norm.

“This year is going to be a year of adjustment to a different market than we’ve seen in the last couple of years,” Froese said. “And the return of consumer confidence.

“We’re in a shoulder season right now, but we’ll be back to our seasonal norms soon.”

jfreysam@freepress.mb.ca