Ben Sage, Moving Woodstock
May 2017 Woodstock Residential Market Report
Time for a Breather?
Last month’s question: “When will this crazy real estate market come to an end?”
This month’s Question: “OMG HAS THE MARKET CRASHED???”
Short answer, NO. It hasn’t. Everything is fine. Seriously.
The psychological impact of the government’s “16 point plan” to temper the real estate market has arrived. As such, we are reading anecdotes of slower open houses, fewer offers after a couple of days on the market, sellers only getting a little bit over asking price, rather than enormous 100k over asking offers…
All in all, the market remains an immensely strong sellers market, but the initial fevered pitch of buying activity has tempered slightly in the month of May, and will likely continue into the month of June, as we head into typically slower summer months.
Last month I pleaded for sanity in terms of estimates of home values. The plea continues this month:
“Be careful not to anchor on to these current market values. Woodstock, and surrounding communities, have been experiencing increased demand, as home buyers from more expensive markets head west on the highway and ‘drive ’till they can afford it.’ There’s a high likelihood that at some point in the mid term there will be a softening of real estate prices, as the Toronto market cools.”
We’ve started to see some softening in the Toronto real estate market, with a minor price correction, and increase in supply in the GTA. Because so many of our buyers have been overflowing from the GTA, it’s reasonable to expect a slow-down in demand here at home as well.
Now, lets cut to the chase: Here are the hard and fast stats from the Woodstock Residential Real Estate Market for May 2017
Active inventory had a reasonable rebound in May, with 91 homes for sale in the city of Woodstock at the end of the month. This was up 37 homes from the end of April this year, but below last year’s available inventory, which showed 110 homes for sale at the end of May 2016. For historical context, the past several years worth of inventory in May looks as follows:
2017 – 91
2016 – 110
2015 – 220
2014 – 246
2013 – 228
2012 – 273
2011 – 351
2010 – 344
So you can see, based on this 7 year history, supply is still at ridiculously low levels.
Supply only tells half of the story, though. Has demand decreased, or increased?
In the month of May this year, we had 103 homes change hands in the city of Woodstock. That was up from May 2016 by 34%.
For some perspective, here’s a short history of the number of sales in May, over the last few years:
2017 – 103
2016 – 77
2015 – 64
2014 – 71
2013 – 70
2012 – 41
2011 – 51
So, once again, demand is still at HISTORICALLY HIGH LEVELS!
So this takes us to the metric of supply and demand, known as Absorption Rate. Absorption rate blends supply and demand into an easily understandable single metric. Essentially, Absorption Rate is the story of “How much supply exists, relative to the current demand?” and it is expressed as a number. This number is the “number of months of inventory” currently on the market.
Simply put, if the Absorption Rate were 2 months, that would mean that at current demand, all homes for sale would be sold in two months (assuming no new listings come on the market during that time).
It is said that an absorption rate of between 5 and 6 months of inventory is a “balanced market,” and of course as the rate decreases, prices go up as demand outstrips supply. As the rate INCREASES, prices drop, as buyers have more options, and therefore have enhanced bargaining position to negotiate better deals in the marketplace.
Check out this chart, which I update every month. It measures supply relative to demand.
Lower Line = Sellers Market / Prices increasing.
Blue Line = Absorption Rate in 2017.
Yellow Line = 2016 (property values increased by 13.5-16%).
Green Line = Last Five Years Avg Rate.
As you can see, we have been enduring a period of extremely low supply relative to demand. May showed a continuance of easing in this metric, at 0.83 months of inventory available. That means, even with the uptick in inventory, we still run out of houses to sell in 3.6 weeks, if nothing else gets listed for sale!
We still have a long way to go, to get back to a balanced market.
So what does all this mean in terms of values?
Well, average sale price showed another tremendous gain of 24.1% over May of 2016, as demand continues to be stronger than relative supply increases. The average sale price for a Residential non-condo property in Woodstock hit $368,097 in May of 2017. This dropped a bit from last month.
Look how the May average price in Woodstock has appreciated over the past few years:
What if I’m in the market to buy?
The timing might be perfect towards the end of June, into July. You may be looking at a confluence of events that might provide you with the perfect opportunity to negotiate a purchase. The “pause” in the GTA market is likely to “hit” Woodstock sometime in the month of June, if it isn’t already here. Combine that with the historical likelihood that things will “slow down a bit” in the summer months, and you could just hit the jackpot in terms of buying opportunity. As of the writing of these numbers, it doesn’t seem like a GREAT opportunity, but given the context of the market we have seen for 16 months or so, it’s the best chance we’ve seen for a good buying opportunity.
Over the past year and a bit, when supply has become extremely tight, we have continued to work diligently for our buyer clients, employing strategies to help them win in this challenging market. We are constantly examining market fundamentals, to give our clients the best opportunity to make their dreams a reality.
The market is beginning to show signs of slowing down a tiny bit. It remains a great time to be a seller, and our Dream Home Finder program is the perfect tool to help you navigate this market, if you are looking to buy a home.
We take enormous pride in understanding the market, to best assist our clients to capitalize on current conditions.
I have been successful helping clients buy, sell, or lease residential, commercial, or investment properties in the Woodstock, Ontario area since August of 2007. With technical experience ... Read More...