Believe it or not, we’re already through the first quarter of 2018. Not only that, but the numbers are in, and not surprisingly we’re still in the midst of a Seller’s market.
If you’re interested, read the excerpt below for an explanation of how a market is defined as either a Seller’s or Buyer’s market.
(Skip this part if the specifics don’t interest you)
To understand how markets are defined we first have to understand two related concepts:
Absorption rate is the rate at which homes sell in a given area during a given time period. Absorption rate is calculated by dividing the number of sales in a given month by the number of available homes for sale. It is the inverse of months of supply.
For example, if there are 100 condos listed for sale in a certain area, and 10 condos sold over the last month, the absorption rate is 10/100=10%.
An absorption rate of 20% or higher means that homes are selling quickly and the market favours sellers. Lower absorption rates mean that homes are not selling quickly and supply is much greater than demand, favouring buyers.
Months of supply is the measure of how many months it would take for the current inventory of homes on the market to sell, given the current pace of home sales. For example, if there are 50 homes on the market and 10 homes selling each month, there is a 5 month supply of homes for sale.
Months of supply is a good indicator of whether a particular real estate market is favouring buyers or sellers. Typically, a market that favours sellers has less than 6 months of supply, while more than 6 months of supply indicates an excess of homes for sale that favours buyers.
For this newsletter we’ve decided to break things out into a little more detail. In the past we’ve included the entire board in our numbers. This means that Gananoque’s, Napanee’s, and several other smaller municipalities and rural areas were included in the market stats we provided.
This time we’ve excluded everywhere outside of Kingston’s city limits. We’ve also highlighted sales North of the city for our cottage buyers (unfortunately we’re not able to specify waterfront-only).
For our Buyers and Sellers looking in Napanee, Gananoque and the surrounding areas please contact us directly for your stats. So, without any further ado here are the numbers, accompanied by our interpretation(s):
KINGSTON – First Quarter – 2016/2017/2018
The average sale price of a home in Kingston has risen 21.75% (10.75% and 11% respectively) in the last two years (this includes, townhouses, semis, and detached homes).
Q1 2016 – $318,076 (564 sold – 1,341 listed)
Q1 2017 – $352,588 (611 sold – 1,061 listed)
Q1 2018 – $391,685 (409 sold – 713 listed)
You’ll also note the obvious drop in the number of homes listed, and although we saw an increase in the number of houses sold in Q1 of 2017, there was a marked drop in sold properties in Q1 of 2018.
NORTH of KINGSTON – First Quarter – 2016/2017/2018
The average sale price of a home/cottage North of Kingston has risen 19.5% (7.5% and 12% respectively) in the last two years (detached homes, cottages, waterfront and non-waterfront).
Q1 2016 – $304,899 (105 sold – 402 listed)
Q1 2017 – $327,491 (110 sold – 296 listed)
Q1 2018 – $367,388 (72 sold – 197 listed)
Not surprisingly the trend North of Kingston closely mirrors what we’ve experienced in the city. For our waterfront buyers you should note that these numbers include BOTH waterfront and NON waterfront homes.
Blips, Bumps, Inconsistencies, and Anecdotes
These numbers can be helpful but they can also be confusing. For instance, we’ve used the AVERAGE sale price. We don’t have access to the MEAN sale price any longer (which really is too bad) but when we did it often told a different story than that of the average price. The mean was often significantly lower than the average price which lead us to speculate that there had been a spike in the sale of more expensive homes that had driven up the average sale price, and thus, the higher average sale price wasn’t necessarily a direct reflection of price increases across the board.
There are also anecdotal bits of information that can tell a very interesting story. For instance, we did a market analysis for a client recently. At the time of the market analysis there were only 2 active comparables on the market. As it turned out both comps sold quickly, and appeared to push the market higher. Unfortunately the market shifted noticeably in a matter of weeks as the market was suddenly flooded with similar properties. Yes, it’s the old case of supply and demand but when it’s put in to play in such a specific and time sensitive way the results can be disarming (BTW – our clients have decided to wait until the current influx of listings sell so that they might be able to list when there’s once again a shortage in supply).
We’ve also started to experience something that we’re calling “buyer fatigue”. It seems that this prolonged Sellers market has resulted in some buyers running out of steam. Houses are seeing dozens of showings and a mountain of interest only to receive one offer or, worse, to wind up sitting on the market longer than expected. The reasons we’re hearing this have less to do with fewer qualified buyers (there are a lot of buyers out there) than it does with buyers not offering because they don’t want to compete in multiples, or the sense that something better has got to be just around the corner. We don’t know if this is a trend that is going to continue and result in a slightly cooler market or just an anomaly of the last few weeks that may have already disappeared.
So, what the heck should you do?
SELLING? Our advice remains largely unchanged. If you’re considering selling – now is a great time. Talk to us about your neighbourhood specifically, as well as what’s on the market that compares to your home. Not everyone has the luxury of waiting to try and list when there’s a lull of activity, but if you do it might be worth contemplating. That said, listings are still WAY down so there’s a good chance your neighbourhood is currently in one of these supposed “lulls”.
BUYING? Ditto for our past advice. If you’re serious about buying in this market it’s time to get active and get aggressive. This in no way implies out-of-control, emotion-based decision making, but it does mean getting out there and seeing homes as soon as possible. A lot Seller’s our now signing FORM 244 which means they’re holding off offers until a specified date. For these homes time isn’t necessarily of the essence, but many sellers aren’t signing these forms which means that the first showing could result in an offer.