If I was to pick three measures (metrics) to most accurately reflect today’s real estate market, those would be:
Inventory (Supply)
Sales (Demand)
Months of Inventory - velocity of sales compared to inventory
Simply, Inventory is how many homes (Active Listings): Answer: 934
Sales - How many homes were sold in most recent month: Answer: 161
Dividing Active Listings/Sales gives M.O.I. Answer: 5.8 Months
As at November 30, 2024, if no more listings came on the market, it would take almost 6 months to deplete the current inventory to 0. This is squarely in Balanced Market territory.
To show this and confirm where our real estate market is in the cycle, these guidelines provide the best prediction of where the market is going:
When Months of Inventory (M.O.I.) is less than 4 months = Sellers Market - (2020 - 2021 - Spring 2022) Prices Rising
When Months of Inventory (M.O.I.) is between 4 - 6 months = Balanced Market (YTD 2024) - Prices Flat
When Months of Inventory (M.O.I.) is greater than 6 months = Buyers Market Prices Declining
Comparatively, at the peak of the market in 2020 - 2022, there were less than 1 Month of Inventory and Sales were north of 300 homes per month on average in our QDAR (Bay of Quinte/Hastings & Prince Edward County) area. That’s why prices were increasing at 30% + per year over this time period when we enjoyed an unprecedented increase in home values — a perhaps once in a lifetime anomaly during this time period.
Realistically, increases in home prices of the magnitude we saw in 2020 - Spring 2022 will not return anytime soon, especially with the current interest rate environment faced by Buyers and anyone renewing a mortgage. Interest rates are just recently starting to decline, see separate post on interest rates.
With the current 5.8 Months of Inventory, we continue to be in a “Balanced Market” and prices are expected to remain at this level over the next several months.
The real estate market is very localized, so each area can differ dramatically. 5.8 Months of Inventory is for all of the Quinte and District market (including all of Hastings County, Bay of Quinte and Prince Edward County). There are big differences between geography, type of home (detached, condo, townhome, waterfront, etc.) urban vs. rural.
Quinte & District - Residential Market Activity
Includes all of Hastings and Prince Edward Counties and Bay of Quinte Area
Sales in November, 2024 were 161 units, a 28% increase from 126 sales in November, 2023.
Inventory (Active Listings) as at November 30, 2024 increased 45% to 934 from 646 November 30, 2023
The average price of homes sold in November, 2024 was $566,916 a decrease of 6.25% from $604,707 in November, 2023.
The 12 month residential house price index (HPI Index) was flat with a slight decrease of -0.8% compared to November, 2023 for all of Quinte & District.
Hastings County experienced a 13% increase in sales, with 128 transactions compared to 113 in November 2023. While sales grew, the average price saw a modest decline, dropping from $542,897 to $527,354.
Prince Edward County experienced a 65% increase in sales, rising from 20 in November 2023 to 33 in November 2024. At the same time, the average price decreased from $874,993 to $720,367.
With 5.8 Months of Inventory in the current market, we are technically in a balanced market. However, on the street, it very much feels like a Buyers Market, so it is important that you have a well educated up to date adviser that understands the nuances in the current market and where it is heading.
The Bank of Canada took the lead earlier this summer by decreasing interest rates by 25 basis points three separate times: June 5, 2024, July 24, 2024 and September 4, 2024, for a total of 75 basis points. The rate was then decreased by an additional 50 basis points on October 23, 2024 to 3.75%. The next policy setting date is December 11th, 2024 where we expect an additional 50 basis point reduction to 3.25%.
South of the border the U.S. Federal Reserve reduced its overnight rate by 25 basis points on November 7, 2024 to a target of 4.50%-4.75% after redcuing September’s interest rates by 50 basis points on Sept. 17th/18th. The next meeting is scheduled for December 17/18, 2024 where we expect another decrease 25-50 basis points.
With rates on both sides of the Border heading down with the most recent inflation numbers finally giving the central banks the evidence and comfort that they needed to lower interest rates, this all bodes well for the residential real estate market, future affordability and Buyers coming off the sidelines.
To really understand your local market, you need a seasoned and experienced realtor that understands these differences and the market nuances and is not afraid to get into the weeds to simplify and articulate today’s complicated market for you.
IT’S TIME FOR REAL MARKET INSIGHT AND A FREE MARKET UPDATE ON THE VALUE OF YOUR HOME
CALL KIM TODAY | 613-968-0251
Comments