One thing we’ve learned over the past few weeks is that the media loves a crisis! I’m sure that you have read doom and gloom headlines about the Toronto real estate market dropping 69%.
Smart readers know to dig beyond the headlines. Yes, the volume of trading in most markets has dropped by over 60% – however that means that many buyers and sellers are still active. What most of us want to know is “how has this crisis affected the value of my home”. The good news is that Kingston residential real estate values are holding strong.
Leading experts, such as Steve Harney at Keeping Current Matters, remind us that unlike 2008, this is a health crisis, not a housing crisis. Experts disagree on the shape of economic recover – will is be V-shaped or U-shaped but most agree that the market will come back as soon as people are back to work.
In a recent survey by Point2Homes, 80% of Canadian realtors surveyed said that the believe the market will return to normal within 12 months, 51% predict recovery with 6 months.
Let’s look at what’s happening in the Kingston market.
For over three years Kingston has been a “seller’s market”. Homes have sold quickly, at close to asking price, and multiple offers are common. 2020 started very strong with average prices growing 11.8% in the first quarter. On average, homes were selling for 98.8% of asking price. Even though things slowed after the 13th, March numbers were strong as offers firmed up. Kind of like the big ball in Indiana Jones, the market kept rolling for a while after the shut down.
Not surprisingly, the market has slowed significantly in April. Based on units sold, the market dropped to 40% of 2019 levels. One thing that is important to note is that a home is considered “sold” when all conditions have been fulfilled. Because our lenders and lawyers are working from home, condition periods are taking longer.
The good news is that average home prices have increased 5.8% over 2019. Median prices however have increased 10.4%. This difference is driven by a shift in market mix to detached homes which generally have a higher price point. In addition, luxury home buyers are the most insulated from the economic pressures of the last few weeks which shifts the median price a bit higher.
Even with longer condition periods, average days on market has reduced by 1 day – this recognizes that the market is mainly focused on qualified buyers and motivated sellers.
Let’s look at April results by housing type. Don’t be alarmed by negative numbers – there are reasons for these results.
The good news is that the average selling price for detached homes has grown by 9.1% – with 134 sales, this was the most active segment of the local market. Detached homes make up 76% of total units sold – last year Detached homes were 73%. Why is that?
Most buyers chose semis, townhouses, and condo apartments as their first home. This group of buyers was particularly hard hit by job losses and economic uncertainty due to Covid. Unit sales of semis dropped 65% while townhome sales dropped 74%. You will note that the average price of both dropped (4.5% and 10.1% respectively) while the median price increased. Last year, this was the market segment that was seeing multiple, above asking offers. With so few sales in this category, we are not really getting an apples to apples comparison. A few sales in the lower price range can skew the averages – I am comforted that the median prices continue to show year over year growth in value.
With condo managers and boards reducing or eliminating in person showings, it is not surprising that apartment sales have slowed. Average and median price fell by 18% but with very few unit sales, this suggests that the mix of units sold tended to be lower priced than normal.
Stats are interesting but “market activity” is only one way to determine the value of a home. If you are curious about the current value of your home, contact me and I will be happy share a detailed market assessment for your unique home.
Looking at market activity for the past 6 weeks the lowest point was the week of April 9 – which was also Easter. We are seeing a sharp increase in new listings and I expect sales to follow in the coming weeks. This is consistent with data collected across North America by Showing Time which reports data for over 250 MLS regions.
I sincerely hope that our community continues to be safe and healthy. Is now the time to buy or sell a home? Honestly, it depends. Let’s chat about your goals and together we can put together a plan that meets your needs.
Check out the detailed market report for your neighbourhood below:
Lennox & Addington – April 2020