4th Quarter 2022 Real Estate Stats: Growing choice for buyers
Published on February 13, 2023
The numbers are out! The 4th quarter of 2022 continued the trends that marked the 3rd and end of the 2nd quarters. The steady rise in Canada’s key interest rate pushed up mortgage rates and seems to be bringing down a market that was booming not long ago.
Want to see what the market was like in the 3rd quarter of 2022? Read the previous Real Estate Minute article.
Looking back, the months of October, November and December 2022 brought us very close to a market that would have buyers and sellers on equal footing. See the statistics for the 4th quarter of 2022 and our forecasts for the beginning of 2023 in this Real Estate Minute.
Contents:
- Inventory continues to grow
- Slightly lower selling prices
- Rapid sales still in decline
- Multiplexes not affected the same way
- Trend analysis and a look at what’s to come
Inventory continues to grow
The number of properties available on the market in Quebec, which had risen around 3% per month during the 3rd quarter1, continued to rise during the last quarter of 2022. There were 2,884 additional residential properties on the market in the 4th quarter compared to the July–September quarter.2 In total, the number of properties for sale in the province rose 43% between the first and final quarters of the year.3
While this increases competition between sellers, the volume of properties available on the market remains low compared to 2019 and previous years.
Diverse regional realities
As for the different regions, the Gatineau census metropolitan area has the highest variation between the beginning and end of 2022. With a 96% increase of its inventory,4 it surpasses the Montréal (56%)5 and Sherbrooke (51%) regions,6 all areas where the shortage of properties has been most strongly felt. Conversely, the Saguenay metropolitan area had the lowest increase in inventory between the 1st and 4th quarters, a meagre 7%, with only 37 more properties on the market.7
Falling demand
Several factors dampened the enthusiasm of aspiring owners throughout the year. Inflated selling prices were already beginning to have an effect on the number of properties on the market, increasing the number of available properties compared to the number of interested buyers. On the other hand, successive key rate hikes by the Bank of Canada, which began last March, undoubtedly contributed to a slowdown of the real estate market. These impacts were particularly noticeable toward the end of 2022, given that the key rate went up 1 point between October and the beginning of December.
Therefore, due to higher mortgage interest rates, buyers had more difficulty qualifying for a loan on the property of their dreams. This had an effect on the number of buyers shopping for a house.
There are several signs of falling demand, including the number of transactions during a given period. This indicator has decreased considerably compared to the same period last year, despite a much larger inventory. Province-wide, nearly 10,000 fewer properties sold in the 4th quarter of 2022 compared to 2021, a 36% difference.8
Slightly lower selling prices
With the inventory of properties growing steadily and overbidding coming to an end, buyers are now in a better position to negotiate. In addition, the rise in mortgage rates—a result of the increase in the key interest rate—has also put downward pressure on prices since August 2022. There are fewer aspiring owners, and they have less financial room to manoeuvre.
Although median selling prices have been going down for several months now, they remain generally higher than the market price for the same period in 2021.9
In the 4th quarter of 2022, the median price for the province of Quebec was $361,000, a 5% increase compared to the 4th quarter of 2021.10 The Trois-Rivières metropolitan area had the highest increase compared to 2021, at 23%.11 Unsurprisingly, the Montréal area saw the smallest increase (3%).12 It is also in this metropolitan area that the prices of single-family homes were the highest in the 3rd quarter of 2022, nearly $100,000 more than in Gatineau, the next down on the list.13
Rapid sales still in decline
There was a transition in 2022: the percentage of properties that found a buyer within 30 days of being put on the market decreased steadily from month to month. In the 1st quarter of the year, the attention a new property would receive generated such strong demand that most homeowners accepted an offer to purchase in under a month.14 In the 4th quarter, only 20% of residential properties listed on DuProprio.com found a buyer within 30 days of the listing being posted.15
The last six months of the year have forced us all to readjust our expectations: we can no longer expect a real estate transaction to materialize in the first days of a property being put on the market.
Multiplexes not affected the same way
Multiplexes, or multi-unit dwellings, were not affected in the same way by the changes to the real estate market during the last months of 2022. Investors seemed to be more cautious during these times of real estate uncertainty. In the 4th quarter of the year, demand for this type of property decreased more than for any other type of residential real estate. The multiplex inventory increased 15% during the last quarter of 2022 compared to the months of October to December 2021,16 while sales of this type of property went down 47.5%.17
The Montréal census metropolitan area had the most abrupt slowdown. There, the selling price for multiplexes even dropped 1% during the 4th quarter of 2022 compared to 2021,18 reaching $665,000.19
Trend analysis and a look at what’s to come
In a changing market, as evidenced by the shifting real estate indicators during the course of 2022, it is difficult to paint a fair and uniform picture. It depends, among other things, on the area, the type of real estate product and the price range it falls in.
Nevertheless, the signs observed in the 4th quarter of 2022 tend to show that the real estate market is not yet a buyer’s market. When calculating the number of months in inventory in the province, the last quarter of 2022 favoured sellers. The ratio between properties sold and new listings is also moving in that direction, but indicates a market trending toward balance.
Since the rising supply of properties for sale and falling number of sales were rather constant during the last months of 2022, the market could soon be considered balanced. This would result in a fairer balance of power between buyers and sellers, negotiating as equals.
Remember that a property that is sought-after, well-maintained and offered at a fair and competitive price will find a buyer, regardless of the state of the market. It is enough to adapt your strategy depending on whether you are looking to buy or sell a home in 2023!
Check our blog regularly to get the latest updates on real estate news in Quebec!
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