Market Analysis for June, 2021
In April I called the market situation ‘irrational’. Can it get any worse than that? In one word: YES.
At the time of writing, the sales-to-listing ratio was more than 81%. Historically, with a sales ratio like that, price rises should be very strong.
However, almost the reverse is happening. In the last two months, prices for all homes except apartments have dropped.
Here are the numbers for comparison: In April the condo apartment average price was $491,000; at the time of writing it was $496,200. This is the only increase.
Meanwhile, condo townhouses averaged $662,800 in April; today they are down slightly to $662,500.
Freehold town homes averaged $838,700 in April, today they are down to $833,300 (-0.6%).
Semi-detached homes averaged $893,500 in April, now they average $892,300 (-0.1%).
Finally, detached homes averaged $1,194,500 in April, now the average price is $1,189,300 (-0.3%).
These decreases may seem slight, but keep in mind that with such a high sales-to-listing ratio, there should be a steady increase in prices, not any decline.
On top of this comes the surprising fact that more than 73% of all sales in Brampton were for more than the original asking price. With so many homes selling for more than asking price, how can average prices be decreasing overall?
The only conclusion is that sellers (possibly prompted by their agents) are underpricing their initial listing to attract multiple offers and increase the chance of firm offers. Yet, the achieved selling prices are basically not more than if the homes had been priced normally.
Conditional offers protect the buyers and sellers alike, but firm offers make life a lot easier for agents—no guiding clients through the steps of fulfilment, no extra paperwork. However, the risks to buyers are significant. (See my article The Danger of Firm Offers elsewhere on this site.)
Where will this take the market? If real price increases have stalled, even in a market that heavily favours sellers, an adjustment may be on the way.
Want to know more about the state of the market? Just ask me, I'll be happy to help.