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Sales across much of Canada have slowed dramatically after the Bank of Canadas interest-rate hike forced banks to also move theirs up. Photo by Postmedia, file
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A local real estate broker has thrown some cold water on the panic some may be feeling in the housing market.
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Winnipeg’s real estate market has been like sitting in a hot tub for the last two years and now it is like jumping into a warmer pool, which will feel cold, but the water temperature is, in fact, warm. That’s the analogy used by Michael Froese, a managing partner with Royal LePage during an online webinar on Friday.
“Just because the pool feels colder than the hot tub doesn’t mean it’s bad, it doesn’t mean it’s actually cold,” Froese said. “Some of the market cooling, it’s cooling to go to a beautiful 85 degrees (Fahrenheit), this is a healthy real estate market.”
Froese pointed to the trends in real estate prices as one with peaks and valleys, but generally always heads in the right direction. High home price growth of 15% or more is commonly followed by short periods of modest price drops.
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“This is what is also a really key thing to remember, is in real estate, and in housing, the highs of the high are usually more intense than the lows of the lows,” he said.
For instance, the average price of a single-detached home in Winnipeg in 1994 was $89,352, and the following year the average price dropped to $87,387. Then in 1996, the average price jumped up to $90,047.
“There’s going to be seasonal blips,” Froese said. “And we have an interest rate hike anticipated again in July, coinciding with our natural, plateauing and decrease of sales and price activity, means it’s going to it’s going to come down temporarily, but then it bounces back.”
Froese referred to Winnipeg’s housing sector as a “Goldilocks” market because it doesn’t get too hot or too cold, it’s “just right.”
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“We’re very resilient to these volatile swings,” he said.
In 2021, 63% of houses sold over their listing price, with 28% going below the listing price and 7% going for the price listed. Froese said bidding wars for houses are slowly de-intensifying as well as the prices homes go for over their listing price.
Sellers are likely to price their homes at a listing they’re more willing to accept in the future, which can lead to more room for negotiation, Froese said. What that means with the sales to listing ratio points to prices holding on, he added.
“We’re going to see some prices depreciation because we have to, and it happens every single year pandemic are not interest rate or not prices always fluctuate, but it will be temporary,” Froese said.
Twitter: @steltsy95
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