2022 was a strange year in real estate. Can we expect the same in 2023?
Now that 2022 is behind us, I hope you had a great holiday season. I hope you had a great New Year’s. I wanted to give you a wrap-up summary of what happened in 2022 and share with you my 2023 predictions. So let’s get right into it.
In 2022, prices peaked in the greater Montreal area and the greater Montreal market in the second quarter of 2022. At that point in time, prices had already gone up about 10% for the calendar year, meaning from January to the peak, we gained 10%. We were selling about three properties for every four new listings. The average days on market were below 30 days, and we were at about two months of inventory, meaning that there was two months’ worth of properties on the market at any time, and this is what we categorize as a typical seller’s market.
Now, since then, obviously, given the runaway inflation situation that’s happening across the country, the Bank of Canada has had to increase interest rates, and it’s had quite an impact on the real estate market.
“From January to the peak, we gained 10%.”
By the end of the year, here’s what’s been happening. We’ve doubled our days on market, meaning we’ve gone from 30 to 60. For every four new listings, we’re now only selling two properties, which is a 33% reduction, and we have eight months of inventory. This has yielded an average year. This has made a difference in the median selling price of 10%, meaning we’ve gone down in value by 10%. If you’re keeping track at home and you’re good at math, we went up 10%, and then we went down 10%, which means for the year 2022, values are very similar from beginning to end.
Now, what’s going to happen in 2023? Well, I predict that prices will continue to go down as inventory goes up and buyers are having a hard time qualifying for mortgages, and this will happen still for some time now. The news is not all terrible. I want you to compare this to what was happening in Q1 of 2020. I think we all know what happened shortly thereafter. So in 2020, we still had worse market conditions than we have now, meaning we had days on market that were over 60 days. In fact, in some cases, it was about three months, and the average price point was much lower than it is now. So to give you an example, at the peak of pricing in the year 2022, the values were up anywhere from 40% to 60% more than they were just a few years ago at the beginning of 2020. Now, even with the recent loss of value, we’re still sitting at about 20% to 40% higher price points than what we had before the runaway market that started just at the beginning of the pandemic. So it’s not all bad news. We still have tremendous values. And as the market corrects, you shouldn’t be too worried about the value of your home because you still made a tremendous gain through the last couple of years.
Now everybody’s situation is different. So if you want to find out more about your situation and you want to get my advice, I’m always a call or a text away at (514) 917-6284. If you have any real-estate-related questions, I want you to email them directly to me.