2023 Real Estate Wrap-Up
By Stefan Walther | December 21, 2023
As we approach the end of another year, as we look to tie up loose ends, reflect, and maybe adopt a fresh outlook for the new year, it’s a good time to check in and assess how the real estate market performed in 2023. What happened, how did things shake out, how good or bad was it, who benefitted, what were the trends.
The typical big, hot and active selling season came to a close a bit ago, that being April through into October, when the largest number of both buyers and sellers are in the market.
Simply put, 2023 can be summed up by
• low supply
• strong demand
• far less frenzy
There were many more buyers in the market than there were sellers in 2023, fewer homes for buyers to choose from. And there still are.
This essentially meant it was once again a seller’s market, which has been the name of the game since the pandemic hit four years ago. As most everyone knows by now, there is a shortage of homes available across Canada and this includes right here in Thunder Bay.
Further outstripping an already short supply of available homes in the market, by fuelling and increasing the demand, have been low mortgage rates — at their lowest ever during the pandemic, and still relatively low now (albeit at their highest in 22 years).
Why was supply so low? Market uncertainty and those pesky rising mortgage rates.
First, and this was especially true in the very early days of 2023, was the market uncertainty, not knowing how the market would shape up and perform. Mortgage rates were trending upwards, the future was anything but predictable.
So if a seller took a chance on the unsettled market, would they be rewarded with a fast sale and a good price, or would they be punished by few inquiries and a poor price, or maybe even no sale. And so many sellers sat on the sidelines in the spring, preferring to spectate rather than jump in the game.
Another factor was how the rising mortgage rates could affect the seller. Because for most homeowners, in order to sell their home, they need to buy another one. And while they may get top dollar for their current home, if they require a mortgage on their next, it would be at these higher, still-increasing rates.
We have become so accustomed to the bargain low mortgage rates that we are somewhat unaccepting of the higher, but still relatively and historically low, current rates.
Average bungalows tended to sell quickly in 2023 — and usually over the asking price.
However, as spring sprung, many sellers did, in fact, enter the market and list their homes for sale, just not in the usual, higher numbers.
Both buyers and sellers seemed to acknowledge and begrudgingly accept the current market situation and decide, well, mortgage rates are what they are, and if we want to buy or sell, let’s just do it.
And some can tolerate and better weather the market fluctuations than others.
Notice above, we use the adjective “strong” to describe buyer demand, not “high.”
And we use the term “far less frenzy.”
The buyer response was not as intense or crazy as the past couple of years, when mortgage rates were at their absolute lowest, but it was still strong.
The sweet spot in the market was for homes with asking prices between $225,000 and $399,900.
Sellers in this price range generally attracted multiple buyer interest in the first 24 to 48 hours, received at least one or more offers within a week, and sold fast — most often over the asking price.
We here at ThunderBayHouses.com keep close tabs on the market, we are in regular touch with our sellers both before and after the sale of the home. We keep sale information on specific homes private and confidential, but we can proudly say that nearly every home we listed in 2023 sold over its asking price. Again, this is primarily due to the strong demand in the market, and the shortage in supply of homes available.
Many homes sold between $5,000 to $15,000 over their asking price, with some particularly desirable homes — those boasting attractive features and updates, located in decent neighbourhoods — selling $40,000-plus over asking.
Homes sold in 2023 at or above what would be normally considered their fair and reasonable market value, even in what was a quickly changing and challenging market environment, we would say within five percent of the high prices of the previous year, which is consistent with other market reports.
The stellar success rate was impressive. Less buyer frenzy, but continued, quick and solid sales.
Only about five homes that ThunderBayHouses.com listed in 2023 sold below the asking price.
With rising mortgage rates, sellers of higher-end luxury homes had a bit of difficulty in 2023.
But, of course, there were — and there always are — some homes that did not sell. Unfortunately some sellers of higher-end luxury homes, those priced over $400,000 and especially those priced over $500,000 had some difficulties. Many did, in fact, receive good buyer interest as well as several offers, but they were lower offers and ones that were not always satisfactory to the seller.
It goes without saying that the higher priced the home, at a higher mortgage rate, the lower the affordability, thus the lower the appeal and the lower the demand from many buyers. Especially in uncertain times.
But there were still some great home-sale successes in even the higher price ranges. Several in newer neighbourhoods like Tuscany Estates, River Terrace South and Parkdale come to mind.
And who were the sellers who were selling in 2023?
Mostly those who needed to sell, rather than those who wanted to sell.
Our prediction for 2023 had been that, in light of the market uncertainty and the trend of rising mortgage rates, only those who needed to sell would list their homes for sale — not necessarily those wanting to sell, for example for a lifestyle change (country living, waterfront living) or such.
And this prediction held true, with a sizeable number of ThunderBayHouses.com’s listings this year being estate sales. It’s not that many more people passed away this year, but more that homeowners who would list for other reasons, were remaining on the sidelines.
Looking back to our Market Outlook for 2023, published one year ago, we mostly hit the mark. Though we expected to transition away from a seller’s market and closer to a buyer’s market. Perhaps next year.
What happened to mortgage rates in 2023?
After a year of skyrocketing, rates stabilized in 2023.
Mortgage rates are based on the Bank Of Canada’s overnight lending rate.
Let’s take a quick look back and you can, quite easily, see just how notably the rate stabilized in the last 12 months.
Of the eight rate announcements in 2023, the central bank raised the rate only three times and by only a relatively small 0.25 percent. Five times the bank held steady with no increase, an important trend to note.
Compare this to the previous year, 2022, when the bank first started raising the rate from its historic record low of 0.25 all the way up to 4.25. Seven rate announcements saw seven rate increases, only one was a small bump of 0.25, the other six were big — one full percentage point in July, 0.75 in September, four others at 0.5.
All this to combat inflation, bring the broader economy back into equilibrium. Hope is here, and more is on the horizon.
Quick aside: Inflation peaked a year and a half ago, in June 2022, at 8.1 percent, which is when the Bank Of Canada began really aggressively raising the interest rate. Since then inflation has slowly, but steadily, come down, now at around three percent for the last six months. The bank’s target inflation is two percent. Close enough? We hope so.
Another quick aside: While raising the central bank rate does serve to bring down inflation, it also does the complete opposite — it actually contributes to inflation. The federal government even admits so much, stating a largest contributor to November, last month’s 3.1 percent inflation was mortgage interest costs, up a whopping 29.8 percent. Go figure.
And so the brutal hikes were in 2022, stabilizing in 2023, and now we look ahead to hopefully better days in 2024. A return to a more balanced real estate market, as well as a more balanced overall economy.
Where do we go from here?
What has been crystal clear is that, in any challenging market, it becomes even more important for a seller to market a home in the best possible way and to the largest buyer audience, cast the biggest net, which is exactly what ThunderBayHouses.com offers (more info here). A seller needs to maximize the value of their home, the largest investment most of us will ever make. Sell privately, pocket the full selling price, no need to pay a high-commission salesperson.
We are just days away from the calendar flipping over to 2024. What does the market hold for the new year? Will more sellers enter the market? More buyers? Will the seller’s market continue? Or will buyers gain the upper hand? Will mortgage rates go up? Go down? Or stay the same?
So many good questions, and ThunderBayHouses.com has some valuable insight.
Check back to see our Market Outlook for 2024, to be published and revealed in the first few days of the new year.
ThunderBayHouses.com launched in February 2004, we are celebrating 20 incredible years of proudly helping homeowners buy and sell privately — 20 years of being fully immersed in the market. So watch for our informed and enlightening Market Outlook to be published right here in the ThunderBayHouses.com Market Insider blog.
Until then, happy holidays and very best of the season.
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