How’s the Market?
Number of Sales, and Available Inventory both trend downwards
The number of sales dropped 18% from September of 2016, down to 51 homes changing hands in the City of Woodstock. While the number of homes sold dropped, the available inventory dropped between August and September, and was 11.1% lower than the same time last year.
The brief market shift that occurred in July and August, with supply trending upwards, and number of sales very low, has taken a break. The cool summer was duplicated by a relatively cool Real Estate market in the city of Woodstock for July and August, but the arrival of the “second spring” in mid September has brought back increasing demand month over month, and reducing supply.
We saw quite a bit of unease in the local real estate market through the month of September, and into October, due likely to a work stoppage at the CAMI automotive plant in Ingersoll, and the removal of all the the “spirited bidding” coming from buyers to the east.
Some homes are selling over asking, but the buyers who are active in the marketplace right now are generally local families, who perhaps put off buying as a result of the insanity in March/April/May. These buyers are less likely to take the “moon shot” if confronted with competing offer situations, and therefore we have seen average sale prices slip a bit over the past two months, yet still increasing by quite a margin over last year at this time.
Read on for some more specifics:
Active inventory dipped again this month, marking four consecutive months of inventory decline. At the end of August we had 112 homes for sale, and End of September showed just 96 homes for sale. Although we have seen inventory jump from 53 active homes in February of 2017, up to 96 homes at the end of September, it still remains a seller’s market.
Supply is half of the story. Has demand decreased, or increased?
In the month of September this year, we had a healthy 51 homes change hands in the city of Woodstock. Which was actuall DOWN a 18% from September of 2016.
So, demand has rebounded somewhat from last month, supply has also dropped again.
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”, 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 absorption 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%).
As you can see, we have been enduring a period of extremely low supply relative to demand. Also, you can see that August 2017 was statistically the best month to be a buyer since March of 2016, and now that metric has decreased once again. With days on market increasing to 39 on average, the atmosphere around buying a home has changed somewhat. Buyers generall have more time, are able to insert more conditions to benefit themselves, and have a FEW more homes to choose from, though, the “good ones” are still selling very very quickly, and often in multiple offers.
September the trend leaned back into the direction of seller market conditions, at 1.88 months of inventory available. That means, even with the decrease in demand, we still run out of houses to sell in just under two months, if nothing else gets listed for sale!
Will this tightening continue, or just a blip?
So what does all this mean in terms of values?
Well, average sale price showed another healthy gain of 12.5% over September of 2016, as demand rebounds and supply dips. The average sale price for a Residential property in Woodstock was $306,010 in September of 2017, which represents a drop of 8.2% over last month.
Look how the September average price in Woodstock has appreciated over the past few years.
What if I’m in the market to buy?
We are seeing the beginning phases of a fall market with a modest to high level of activity. The trends leading into the fall market are indicating increasing prices, albeit far more gradually than experienced in the first half of 2017. It is expected that if you are planning to buy a home in the last couple months of 2017, you will have a bit more leisure to shop around, but you need to stay on your toes, as well priced homes continue to sell very quickly.
As a buyer, you do have a bit more time to make your decisions, however, as the average number of days on market remains quite low, at 39. There’s also the inventory, which seems to be struggling to regain any real quantity, and in fact took a step back in September.
If I were a buyer, I would keep an eye on the GTA market. When the GTA market begins to show signs of heating back up again, you can be assured that the pressure on prices in Woodstock will follow in lockstep, trailing by 30-60 days.
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.