Oakville's residential real estate market update for January 2023 shows another month of low unit sales and decreasing prices. Purchasers are sitting out as long as possible, trying to determine if mortgage rates will drop or if sellers are forced to sell at lower prices. The only positive sign is that Bank of Canada's Tiff Macklem isn't expected to increase rates further, as CPI fell to 6.3%.
The deciding factor for buyers is whether they can qualify for a mortgage. Canada's stress test for buyers with a deposit less than 35% of the appraised property value is 8.7%.
So, an average Oakville couple looking to purchase a $631,000 condo (median Oakville condo apartment price in January 2023) with a $150,000 deposit must prove they can pay $3,887 monthly or $46,644 annually, which is just over 50% of their annual after-tax income of $95,000. If they have a deposit which 35% or greater, the stress test is 5.25% or $2,865 per month or $35,580 annually.
The federal bank uses the Consumer Price Index (CPI), which, as of December 2022, has increased year over year by 6.3% but declined half a point since November. Even with this substantial decrease in the CPI, the Bank of Canada raised its lending rate by 0.25% to 4.5%.
GTA Update
Across the GTA, owners sold 3,100 (or 2,949 fewer properties) in January 2023 than in January 2022, a 44.5% decrease. Over the same period, GTA property values decreased by 16.3% to $1,038,668, down $203,739.
Oakville Update
During the last month, sellers in Oakville listed 288 properties and sold 122 properties. Available inventory expanded to 2.2 months.
The average residential property sold for $1,381,455; a sale took 45 days, up one day from December 2022. The days on the market (DOM) have increased to 48.
Even with a decrease in activity and an increase in the number of days a property is listed, purchasers, on average, are paying 95% of the listed price, down 2% from December 2022.
Year-over-year home prices
A typical residential property in Oakville is now going for $1,327,000, which has dropped by 21.86% since January 2022. An average detached home price is $1,701,900, down 22.94%.
An attached home is $1,107400, down from 22.9% from a year ago, a townhouse will run you 20.1% less at $844,000, and a condominium apartment costs $671,700 - down 5.1% from last year.
This is the first time apartment prices have decreased in the past several years. Apartment prices did not increase to the same extent as other types of residences in Oakville during the run-up of real estate prices.
But to provide some historical perspective, in December 2020, an average family home sold for $1.160 million.
This shows that though January 2023 was not a great month for residential real estate, in the past two years, real estate values have increased by 14.3%. In December 2019, the average house price was $910,000, so January's value is 45.8% higher.
Statistics for January 2023 Oakville residential real estate
| Type | Units Sold | Median Price | % LP to SP | DOM |
|---|---|---|---|---|
| Detached | 61 | $1,695,000.00 | 94% | 37 |
| Semi-Detached | 6 | $1,053,000.00 | 96% | 29 |
| Link | 0 | $0.00 | 0% | 0 |
| Condo Apartment | 24 | $631,250.00 | 96% | 52 |
| Town House - Condo | 11 | $756,000.00 | 100% | 16 |
| Town House - Freehold | 20 | $995,500.00 | 97% | 30 |
DOM - total days a property is for sale; % LP to SP - the percentage difference between the list price and the sold price.
The best 5-year fixed-rate insured mortgage is 4.28%, which declined by 0.21% from the December 2022 real estate update. However, a 10-year fixed rate is available at 5.19%, unchanged.
"All three levels of government have announced policies to enhance housing affordability over the long term, including many initiatives focussed on increasing housing supply in the ownership and rental markets," said TRREB CEO John DiMichele in the January 2023 Market Watch.