Following the initial wave of the coronavirus pandemic, one of the biggest stories in the Ontario real estate market was Windsor. After years of seemingly uneventful existence in the broader Canadian housing sector, the Windsor real estate market blossomed to levels unseen in years.
However, now that the Bank of Canada (BoC) is raising interest rates, multiple housing markets across the country are seeing slowing sales activity and tepid price growth.
So, what is happening in Southern Ontario anyway? Let’s take a look at the latest developments.
What’s Happening in the Windsor Real Estate Market?
In October, residential property sales plummeted at an annualized rate of more than 44 per cent, totalling just 407 units, according to new data from the Windsor-Essex County Association of Realtors. In the first ten months of 2022, Windsor real estate market sales tumbled more than 20 per cent year-over-year, with just 5,588 units.
The current state of the Windsor housing market is below historical averages: 37.1 per cent below the five-year average and 30.8 per cent below the ten-year average.
Home prices remained steady to kick off the fourth quarter of 2022, as the MLS® Home Price Index (HPI) rose 6.3 per cent from a year ago to $590,700. The HPI is considered a far more reliable measurement than average or median price gauges. That said, the average price of homes sold tumbled 1.7 per cent year-over-year to $535,628. The year-to-date average price surged 15.5 per cent to $616,643.
Here is a look at how the different residential properties performed in October:
- Single-Family: +5.1 per cent to $636,000
- Townhome: +27.2 per cent to $453,600
- Apartment: +18.4 per cent to $404,200
“Sales activity will be running below typical levels for some time yet as the market continues to play catch-up with a rapidly changing interest rate environment. Looking at the monthly trend it does appear that sales have at least stabilized around levels from July and are not falling any further at the moment,” said Elica Berry, the President of the Windsor-Essex County Association of REALTORS®, in a statement. “New listings are coming in at an average pace and inventories have risen from their record lows at the beginning of the year but are still well below the historical average. We’d ideally like to see even more supply ahead of the eventual turning point when buyers decide to mark their gradual return, since our market is very well positioned to absorb a sizeable increase in inventory.”
Supply in the Windsor real estate market has improved, although some numbers are mixed from a few years ago.
The number of new residential listings slumped more than 12 per cent, totalling 813 new units. This is 6.4 per cent below the five-year average and relatively unchanged from a decade ago for this time of the year.
Active residential listings spiked about 83 per cent to 1,273 units, the best performance for the month of October in more than five years. However, active listings are 12 per cent below the ten-year average.
In addition, the months of inventory at the end of October came in at 3.1, triple the one month from last year. This is also higher than the long-run average of 2.7 months. The number of months of supply represents the number of months it would take to sell current stocks at the present rate of sales activity.
New housing construction levels have been robust this year, though they ostensibly cooled off in October. According to Canada Mortgage and Housing Corporation (CMHC), housing starts slipped 23 per cent year-over-year, totalling 77 units. However, in the first ten months of the year, housing starts advanced close to 12 per cent to 1,338 units.
Is Stability Coming for Housing?
A correction and stabilization are now succeeding the frenzy of 2020 and 2021. The Canadian real estate market was on an unsustainable path during the COVID-19 public health crisis, fuelled by historically low interest rates and households flush with cash and borrowing abilities.
The Windsor housing sector certainly benefited from this and is now going through a downturn. But this could be good news for first-time homebuyers who want to achieve the Canadian dream of homeownership. Windsor has quickly become a desirable place for many Ontarian families.
While Windsor may be enduring a decline, it will not last forever. In fact, with mortgage rates potentially peaking, this could be a terrific buying opportunity for prospective homeowners.