Have real estate prices bottomed out?
Showing their concern for homeowners, the Federal government has suggested a way for lending institutions to keep mortgage renewal increases affordable, and the Bank of Canada signalled that additional rate increases are unlikely and might decrease in 2024.
In November 2023, the Oakville real estate market shows prices continue to soften as we see a decrease in prices and a steady climb in inventory, providing buyers with time to consider their options.
"Home prices have adjusted from their peak in response to higher borrowing costs," said TRREB Chief Market Analyst Jason Mercer. "This has provided some relief for buyers from an affordability perspective."
"As mortgage rates trend lower next year and the population continues to grow at a record pace, expect demand to increase relative to supply. This will eventually lead to renewed growth in home prices."
A typical detached home in Oakville fetched $1.7 million, marginally higher in October. This month-over-month price drop is evident across almost all types of properties except condominium apartments.
In Oakville, there was an 11.6% decrease in the number of properties sold in November 2023 compared to the previous year. A total of 137 properties were sold, 18 fewer than in 2022.
In the past month, Oakville sellers listed 362 properties, pushing up available inventory to 2.7 months since October.
The average residential property in Oakville was sold for $1.36 million, marking a decrease of $30,000 compared to October.
The average number of days it took for a sale to be finalized also saw an increase, reaching 50 days in November, an increase of 13 days from October.
Additionally, buyers paid 97% of the listed price on average, which dropped 1% from the previous month.
Year-over-Year Home Prices
Comparing prices with the previous year, a typical residential property in Oakville now costs $1.29 million, reflecting a 3.26% decrease since November 2022 and a drop of $30,000 from October 2023.
The average price for a detached home stands at $1.7 million, reflecting a 1.29% decrease, also off $29,000 from the previous month.
For semi-detached homes, the average price decreased by 0.89% to $1.08 million but down $50,000 from October.
Townhouses also saw a decrease of 2.04%, with the average price now at $823,000 but down $61,000.
The average price of a condominium apartment increased by 0.41% to $670,000 compared to the previous year, but down $10,000.
November 2023 Oakville residential real estate statistics
| Type | Units Sold | Median Price | % LP to SP | DOM |
|---|---|---|---|---|
| Detached | 77 | $1,639,800.00 | 97% | 27 |
| Semi-Detached | 2 | $1,102,500.00 | 91% | 14 |
| Link | 0 | $0.00 | 0% | 0 |
| Condo Apartment | 25 | $790,000.00 | 96% | 40 |
| Town House - Condo | 15 | $730,000.00 | 98% | 27 |
| Town House - Freehold | 18 | $1,175,000.00 | 99% | 24 |
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 5.49%, unchanged from the October real estate update. A 3-year variable rate is available at 6.1%, down 0.9% from the previous month.
The Consumer Price Index (CPI) rose to 3.1%, a 0.7% decrease from October. However, the Bank of Canada considers three other CPI indicators: CPI-trim, CPI-median, and CPI-common.
These indicators, which are all above the target rate of 2%, showed a downward trend for September.
The trim indicator decreased by 0.2% to 3.5%, the median indicator decreased by 0.2% to 3.6%, and the common indicator hit 4.2%, a decrease of 0.2%.
The next CPI figures will be released on December 19, when the Bank of Canada will make another decision. The Bank of Canada, recognizing that its 4.5% increase since April 2022 is having serious consequences for Canadian families, has shared that it is unlikely that further increases are likely. Rates may start to come down in mid to late 2024.
According to a Royal LePage (RLP) Nanos survey released in late October, 3.4 million households must renew their mortgage by March 2025.
If a family had a 5-year fixed rate $500,000 mortgage from 2019 at 5.14% for 25 years, the new 5-year fixed rate from TD would be 6.49% or approximately $400 more per month. Those renewing variable 5-year mortgages, currently over 8% and converting to a 5-year fix, will save $629 monthly.
"Some Canadians with variable-rate mortgages have seen their monthly payments double or even triple over the last year and a half due to the Bank of Canada's aggressive interest rate hike campaign aimed at tamping down high inflation," said Royal LePage Real Estate Services Ltd CEO Karen Yolevski.
"Those locked into a fixed-rate mortgage, which most are, have been protected from those increases, at least for a short time."