It's all about perspective.

The numbers matter.

This month's blog is all about perspective. Why? Because that’s what the real estate business is all about. Yes, it’s an incredible people business based on building relationships and guiding people to their own decisions, being part of that wonderful process, but we can’t guide anyone if we don’t know the numbers and what they mean. I would highly recommend hiring a real estate agent who knows their numbers and what they mean or else how can you make an informed decision about the biggest purchase or sale of your life? You must also keep perspective of what has happened in the past and understand this is a cyclical business-it is always changing.

Just last week, I was tasked by my business coach to look at what we call the 10 Vital Statistics for real estate. As the title suggests, these are 10 things that anyone buying or selling real estate should know. I usually do this every January for the two years prior, but I was curious about a few things. I wanted to know how 2022 compared to pre pandemic numbers in 2019, and how we’re doing so far this year to date for 2023. Some numbers were not surprising, like seeing that the average sale price of a single family home in the Niagara Region in 2019 was $190,502 and in 2022 it was $800,501. What did surprise me was that even with the average prime interest rate 2.5% higher in 2022 than in 2019, values rose by 76.2%. Yes, we did have a decrease in the average sale price between 2021 and 2022, but if you look back at 2019, prices are still up. In fact, overall appreciation from 2021 to 2022 was 11%.

One of the statistics that truely lets us know how the market is doing and gives great perspective is to look at how many new listings we had and how many sales. Comparing these numbers tells us how much inventory we have, which tells us what kind of market we are in: a seller’s market, a buyer’s market or a balanced market. Knowing this helps us prepare our clients on both sides of how to possibly expect their sale to play out. 

In 2019 there were 8389 new listings and 5022 sales. In 2022 there were 8991 new listings and 4199 sales. 2019 had on average 3.0 months of inventory and 2022 had 2.9 months of inventory on average. Having about 3 months of inventory tells us we’re in a seller’s market. If no more homes went up for sale, it would take about 3 months, in this case, for all the homes to sell and we’d be out of “stock”. Another vital statistic to know is the list to sale ratio: what percentage of the list price were homes selling for? Well, in 2019 it was 97.9%, compared to 102.7% in 2022. Not all homes in 2022 went for tens of thousand of dollars over the asking price as indicated here in the average list to sale ratio. Perspective. 

What’s very telling in our recent market this year is to begin looking at these statistics month over month, rather than year over year. For example, a single family home in the Niagara Region that was built in 1989 or before, increased in value on average 4.9% between May and June of 2023. 

So what does all this mean for the average Canadian just wanting to buy a house? Historical data shows us that real estate continues to hold its value and that real estate is still a great investment for your financial future. When you know your numbers, you are less anxious about your decision to sell or buy, and you’ll have an expert professional right by your side guiding you through the whole process. Things change constantly in life. Interest rates change, public opinion changes but what remains the same is that if you need to buy or sell, you must know how the market is fairing to prepare yourself for how the transaction is going to go. You must also keep perspective when things are changing rapidly and drastically as they have been in the last few years. It’s easy to look on the surface and see a price decrease, but when you look at the big picture with an expert, you’ll see it for what it really is. 

*Disclaimer: statistics are based on single family homes in the Niagara Region as of the day they were reported to the Niagara Association of REALTORS(R) and the ITSO MLS.