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October real estate update: Low inventory continues to drive pricing higher

The latest on real estate in Centre Wellington and area from George Mochrie, REALTOR®
George1

We closed off October in the local Centre Wellington and area real estate market with a record low 24 homes for sale, with only eight houses and condos priced under $750,000.

Low inventory continues to drive pricing higher—especially in the under-$750,000 range—as first-time buyers competed with each other to get a foothold in the real estate market. Winning bidders are often coming from the GTA and Kitchener-Waterloo area.

To say I am concerned with the prices being paid for entry level homes would be an understatement. Unfortunately, with low inventory forecast to be the norm going into 2022, upward pressure on pricing in this category will continue into the first quarter of next year.

Sales in the over $900,000 range are more unpredictable; we are seeing some homes in this category still set record pricing with multiple offers, while other homes take longer to sell—and we are seeing a few downward price adjustments. In the higher price points, newer homes and homes that have been nicely updated are getting good activity, while homes that are seen as needing a bit of updating are still selling but staying on the market longer before selling.

Rural properties or homes on larger lots are outperforming, and condos continue to see increased demand, with limited supply. (It’s a good time to sell a condo).

Now that the election is over, it will be interesting to see if the government follows through on any of their campaign promises when it comes to affordable housing. In my opinion, many of the ideas will be ineffective and are really just band-aid solutions to a bigger issue, but any help will be an improvement. Plus, the CMHC is making some changes to make it easier for first-time buyers to qualify for high ratio mortgages (i.e., five to ten per cent down payment), which may have the unintended consequence of driving pricing up even higher in the current environment.

Too little supply to meet demand is the problem. We need more housing built—especially townhomes, semis, and entry level condos—to really address affordability moving forward.

Blind bidding

One issue that has been discussed a lot lately is the whole “blind bidding” process—where a home gets listed on a certain day, with all offers submitted at once the following week, and where each buyer doesn’t know what the other buyers are bidding. There have been calls to make blind bidding illegal, that a live-auction-type process would be better. Be careful what you wish for. Space doesn’t allow me to put  

forth my full argument here, but in a nutshell, while I’m all for improving the process for buyers and making it more transparent, simply doing away with blind bidding and jumping into a live-auction-style process is not the answer.

The blind bidding process does need to be tweaked, but frankly, it is the fact that certain realtors are manipulating the process, as well as realtors not knowing the market they are operating in and thus not giving good advice to their buyers that is the problem, not the process itself. If any government types are reading this, feel free to call me at 519-766-3716 if you want my thoughts on how to improve the process in the best interests of the public.

Looking forward to 2022, I see a very robust market February through May, and it will definitely continue to be a seller’s market during this time until the supply-demand imbalance eases somewhat—or other factors, such as increased interest rates, enter the equation.

Having said this, as I have mentioned several times in the last few months, there will be an element of unpredictability across the board. Not all homes will sell at record pricing, or quickly, which means it will be increasingly important to use a realtor that knows the local market and who brings marketing skills to the table, which will be imperative to get you the best result in 2022.

If you are thinking of selling in the new year, now is the time to get the conversation going. What is your home worth in the current market? What should you do to your home to maximize your selling price? Feel free to call me anytime at 519-766-3716 to have a no-obligation discussion about your real estate needs.        

Until next month, take care.

George

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