Condos still on top as housing market continues to normalize

By Peter Squire

The summer heat wave is beginning to cool down as we head toward fall, and our hot housing market shows signs of doing the same.

There’s lots to weigh in on as we head into the second half of August with a federal election being called, much media commentary on the fourth wave of the pandemic being upon us with the Delta variant, and some real positive signs of employment  numbers improving as the economy opens up with more Canadians becoming fully vaccinated. Manitobans are doing very well in this regard.

So what about the real estate market after seven months at the national level and seven and one-half months locally? The Winnipeg Regional Real Estate Board (WRREB) had a chance to look at its August mid-month numbers this week.

For context, the Canadian Real Estate Association’s (CREA) July market release talks about sales beginning to normalize compared to the incredibly high point set back in March 2021, and mentions that two-thirds of the markets across the country were down compared to previous months this year.

Winnipeg’s market falls within this group, too, but it did not reach its peak until April where for the first time it had over 2,000 MLS® sales that month. May, which is normally our local market’s busiest month of the year, fell back ever so slightly though still managed to eclipse 2,000 sales. In all honesty, if you look at the 1,975 sales occurring in March and the 1,943 sales transacted in June, all of these four months are exceptional and were record-setting for their respective months.

Back to July where CREA states the actual number of transactions was down 15% on a year-over-year basis from the record set last July. Nevertheless, July 2021 is CREA’s second best July on record. This is the same with WRREB’s market region where July 2021 sales of 1,678 decreased 12% from the best July ever in 2020 where there were 1,898 sales recorded.

Cliff Stevenson, Chair of CREA, said, “While the moderation of sales activity continues to capture most of the headlines these days, it’s record-low inventories that should be our focus. We still have extremely unbalanced housing markets all over the country, so your best bet is to consult with your local REALTOR® for information and guidance about buying or selling a home in these still unprecedented and challenging times.”

This is indicative of our local market’s 2021 trend-line and current situation where we are still well entrenched in a seller’s market.

Again, Winnipeg mirrors this situation, where listing inventory has been depleted due to unprecedented demand created by a pandemic that may have motivated buyers to advance their home buying plans earlier than their original timelines.

The pandemic set the wheels in motion, both with the Bank of Canada dropping interest rates to all-time lows in March 2020, and the increased need for more space for Canadians working remotely which proved too compelling to pull demand forward for housing that was more suitable to meet their present and potentially future needs, depending on how post-pandemic remote work plays out.

So while sales in July for WRREB did moderate from previous months, and July 2020, other indicators showed activity was anything but normal when you are seeking a balanced market. 

The 2,172 listings entered on the MLS® in July were 10% fewer than in July 2020 while the current supply of 2,919 listings for sale at month’s end are down 34% from a year ago. The sales-to-new listings ratio in July was 77% — a little higher than CREA’s 74%.  The long-term average for the national sales-to-new listings ratio is 54.7%.

Another indicator to gauge balanced markets is months of inventory available based on current sales. CREA’s national inventory in July is half of the 4.6 months they want to see to be in a balanced market.  Our local market’s inventory was even lower than CREA’s at 1.7 months.

It was noted in WRREB’s July market release that rapid turnover of inventory continues with 90.6% of residential-detached or single-family home inventory changing hands, and 36.9% for condominiums.

Speaking of condominiums, it is worth noting that in July this affordable housing option was able to buck the downward trend for MLS® overall sales to eke out a slim increase over July 2020 at 225 sales.

CREA’s MLS® Home Price Index (HPI) shows condos in July 2021 priced at $209,700 where a two-storey home is $350,500. The index has been developed through sophisticated statistical models to determine what the most typical unit is selling for in any given market and does drill down in our region’s case to look at each individual MLS® area within Winnipeg or throughout the region that extends as far south as the Winkler/Morden area.

From August 1 to August 15, sales continued to drop off from record-setting months in 2020. MLS® sales for the first 15 days are down 16% from the same period in 2020.

Active listings — or the current inventory as of the end of August 15 — is sitting at 3,099 listings, a 30% difference from the 4,440 listings available last year at this time.

An important point to make is there is also some moderation in single-family home prices compared to some previous months when the average sales price was approaching $400,000. In July, the average sales price was $377,789, and for mid-month August it is $373,993. The condominium average sales price for the first 15 days in August was $242,696.

The National Bank of Canada released its latest Housing Affordability Monitor report in early August and it shows Winnipeg remains one of the most affordable cities in the country. For single-family homes, the premium for buying compared to the national urban composite is -57.7% .The premium for buying a condo compared to renting a two-bedroom condo apartment in Winnipeg is -31.2%.

In Winnipeg, it will take you 28 months to save for a down payment on a representative home priced at $369,511 and an annual income of $75,352, whereas in Toronto you will need to earn $196,913 to buy a $1,146,667 representative priced home  and 318 months to save for your down payment, according to the National Bank’s report.

All local markets vary in pricing, and differ within MLS® property types and areas within the real estate board’s market region. You are always best advised to consult your REALTOR® to provide  their professional expertise on the status of the current market and the properties you are interested in selling or buying.

Peter Squire is the Winnipeg Regional Real Estate Board’s Vice-President, External Relations & Market Intelligence.