Liberty Village Condo Sales January 2023
Already almost two months down and only 10 months to go! Hope everyone’s backs are doing ok with the amount of snow shovelling having to happen recently. If you’re in a condo, your back is probably doing great – pros of living in a condo, eh? Now that we have the status of everyone’s backs, let’s talk real estate.
This month, we saw a decrease in condo sales year over year and an increase month over month. For sales volume, we saw a decrease year over year and an increase month over month. Let’s delve into the numbers for our Liberty Village condo market in January and let them do the talking.
How Many Condos Sold in Liberty Village In January?
January 2023 saw a total of 24 condo sales in Liberty Village. In comparison, January 2022 saw a total of 34 condo sales- a 29.41% decrease. You’re probably wondering why this may be. If we look at the interest rates in January 2022 vs January 2023, we’ll see that the Bank of Canada had an overnight lending rate of .25% in January 2022. January 2023 had an overnight lending rate of 4.5%. This is a massive 4.25% increase in interest rates year over year. Now, you can understand why condo sales dropped by almost 30% year over year – purchasing power is substantially less when interest rates are 4.25% higher year over year.
Month Over Month Changes
When looking at condo sales month over month, December 2022 had 12 sales. That’s a 100% increase in condo sales month over month. Wait, what? Why would condo sales increase by 100% if interest rates were at an all time high? We have a potential answer for you. If we look at the Bank of Canada overnight lending rate, it changed from 3.75% to 4.25% on December 7th, 2022 and then went up to 4.5% on January 25th, 2023. So, it is possible that many were discouraged by the .50% increase in interest rates on December 7th, 2022 and for the month of December, but then got word of the upcoming .25% projected increase end of January. When there is no probable end in sight for interest rate increases, and buyers are pre-approved for only a certain amount of time, it’s a no brainer to secure a spot before interest rates increase even higher. So, that’s likely what we saw in January – double the buyers going out and quickly purchasing a place at comparatively lower interest rates.
To sum it up, condo sales in January decreased year over year and increased month over month and the number of buyers confident enough to make their biggest lifetime purchase was an impressive number (especially month over month).
Mortgage Rate Forecast Canada 2023-2024
Now, looking forward, what are the experts predicting? Altrua Financial, for one, has 3 main predictions: 1) Mortgage rates will likely gravitate lower over the long term, to a historical trend in the low-mid 3% range 2) The market consensus on the mortgage rate forecast in Canada (as of February 21, 2023) is for the Central Bank to increase its rate by .25% from 4.5% to 4.75% in the Summer of 2023 if inflation does not cool faster 3) Early signs of economic slowdown and lower mortgage rates. Do you have any specific forecasts? Let us know in the comments below.
Condo Prices
Sales volume tells us part of the story. Let’s look at prices. Did values increase, remain the same or decrease from January 2022 to January 2023? Let’s take a look at the average sale price for all types of condo sales year over year.
The average sale price in January 2023 was $710,283 on the 24 sales. The average sale price for the sales in January 2022 was $867,799 on the 34 sales. A 18.15% year over year decrease in sale prices. In relation to this percentage decrease, we’re going to mirror what we said last month (so bear with us if the next part sounds familiar). Even though prices were down, impressively, by 18.15% year over year, condo transactions still decreased by 29.41%. If prices lowered, wouldn’t there be a surge in transactions? It seems like that would be the most logical case (and we’ve certainly seen this trend in the past), but we have to take into account more variables than just prices and number of transactions. Let’s bring interest rates into the picture. We told you earlier that interest rates were 4.25% higher when comparing January 2022 to January 2023 Bank of Canada overnight rates. With such a significant interest rate hike in the picture, even 18.15% year over year lower prices don’t make an impact. Why? Because interest rates have an enormous impact on purchasing power and in order for buyers to have the same purchasing power they had when rates were 4.25% lower, prices need to take a much deeper plunge.
The average sale price in January 2023 was $710,283 on the 24 sales. The average sale price for the sales in January 2022 was $867,799 on the 34 sales. A 18.15% year over year decrease in sale prices. In relation to this percentage decrease, we’re going to mirror what we said last month (so bear with us if the next part sounds familiar). Even though prices were down, impressively, by 18.15% year over year, condo transactions still decreased by 29.41%. If prices lowered, wouldn’t there be a surge in transactions? It seems like that would be the most logical case (and we’ve certainly seen this trend in the past), but we have to take into account more variables than just prices and number of transactions. Let’s bring interest rates into the picture. We told you earlier that interest rates were 4.25% higher when comparing January 2022 to January 2023 Bank of Canada overnight rates. With such a significant interest rate hike in the picture, even 18.15% year over year lower prices don’t make an impact. Why? Because interest rates have an enormous impact on purchasing power and in order for buyers to have the same purchasing power they had when rates were 4.25% lower, prices need to take a much deeper plunge.
Now, what about sales pricing month-over-month? The average sale price in December 2022 was $644,000 on the 12 sales. A 10.29% month over month increase in sale price. In order to understand this month over month percentage increase, we’re going to bring back the month over month percentage increase in condos transactions that we discussed earlier. If you remember, condo sales went up by 100% from December 2022 to January 2023, and we referenced that most buyers were racing to secure the comparatively lower interest rate, before it was raised even higher. Now, we have to point out that since the new year, inventory has been relatively light (compared to what we’ve seen in the past – most new years bring an influx in inventory, but we didn’t see that this new year). When we look at classic supply versus demand models and the impact on prices, we see that new supply was relatively low in January 2023, but demand increased (100% increase at that). If there is pressure on demand when supply is lower, then that bumps up prices. And that’s EXACTLY what we saw month over month. Now, we understand that the equation isn’t as simple as we’ve described it above, but this can be one of many explanations as to why the market did what it did.
The Liberty Village condo market for the first month of 2023 surprised us, actually. We were on a rollercoaster ride with peaks and troughs for 2022 and it looks like our seatbelts are fastened and we’re continuing on a bumpy ride for the remainder of 2023. What are your predictions? Let us know in the comments below.
Curious how January 2023 differed from the year before? Take a look back at our post for the Liberty Village condo stats in January 2023.
If you have any specific questions about the market or are curious as to how this relates to your Liberty Village condo, get in touch. You can fill out our Condo Value Form or send us an email.
