January’s market update should come as no surprise to you. The tremendous supply shortage, fear of interest rate hike(s), inflation, and continual demand from out-of-town buyers place upward pressure on home sale prices.
In January, the County of Oxford month over month home sale prices increased by 8.2% from December. The median price (for all property types [single family, semi, townhome, condo, modular, mobile]) has now reached $754,150. Hard to imagine?
In both November and December market update I predicted double digit home price increases in the first quarter of 2022. That prediction was naturally met with some skepticism. I received feedback which read; “No way, that’s impossible”, “your off your rocker, prices have to come down”, “that can’t happen, home values are already too high”. I absolutely appreciate all feedback!! It certainly makes me question my analysis of the data. I have to admit that even I was surprised with January’s numbers. My reaction – Hard to imagine!
Supply & Demand Drives Value
On the supply side, we saw January new listings increase 45.09% over December. Homes for sale at the end of January was marginally improved by 8.5% when compared to December. The fact that homes for sale at the close of January 2022 (51) remained largely consistent with homes for sale at the close of December 2021 (47) , despite the 45.09% increase in new listings, speaks volumes to the strong demand which exists.
On the demand side, home sales in January 2022 were largely consistent with sales in December 2021. However, year-over-year sales volume was up 44.09%
Various underlying factors continue to drive demand, despite rising home sale prices. First, Oxford County continues to see a dramatic increase in the number of buyers from the GTA and surrounding areas moving into the area. Second, interest rates continue to stay historically low. The Bank of Canada has signaled that they will increase interest rates through 2022 in response to “out of control inflation”. The first hike will most likely occur in March. The threat of a rate hike causes buyers to move up their purchase plans – therefore increasing an already robust demand.
Median Days On Market further reflects demand out stripping supply. In February 2009, it was not unusual to see a home sit on the market 90 days. Today, we are seeing homes which are priced, presented, and marketed appropriately, sell within one week. There are homes selling within one day. However, I would never recommend accepting an offer on day one. I feel that a home needs to be on the market sufficient time (at least 4 days) to ensure that it has received ample market exposure.
Sale over List price may also be considered an indication of demand. However, I often question whether the home was listed too low in the first place. We all know the trick is to list low, attracting as many buyers as you can, and generate a bidding war. To be honest, I prefer to list at a fairly realistic value taking into consideration that buyers anticipate having to pay over list. There is a “sweet spot” when it comes to establishing the list price.
Let’s compare Jan-2021 to Jan-2022 median data:
|Median Sales Price
|Homes For Sale
|% of Original Price
The above data suggests to me a strengthening sellers market through the first and second quarter of 2022. It’s difficult to project into the latter half of the year. Will the Bank of Canada raise interest rates to the point where buyers are priced out? Will inventory levels recover? Will there be a change in Capital Gains Inclusion rate affecting individuals with investment properties and secondary residence?
Buyers should not give up hope. There are opportunities out there. In my December market update I shared the success of buyer clients who successfully purchased a wonderful 3 bedroom / 3 full bath / single car garage bungalow in Tillsonburg for $5,000 below list with a close date meeting their timeline. I would like to add to this the success of clients who, in January, purchased a lovely home in St. Williams with a panoramic view of Lake Erie. We negotiated a sale price $75,000 below list with a close date meeting their timeline. Congratulations to my clients!!!
Click the buttons below for median sales prices for all property types within Oxford County, Woodstock, Ingersoll, and Tillsonburg Markets since 2009.
If you have any questions regarding the Oxford County housing market, do not hesitate to call!