Liberty Village Condo Sales February 2023
Hey March! Didn’t think you’d still be seeing snow, did you? Well, it looks like we are getting yet another bout of snow. But, don’t worry, this will be the last one for the season… hopefully. You got through your third month of 2023 – pat yourself on the back. Why are we talking about backs again? I guess we’ve come full circle from last month’s blogpost. Ok, no more back talk – ha – get it? 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 February and let them do the talking.
How Many Condos Sold in Liberty Village In February?
February 2023 saw a total of 25 condo sales in Liberty Village. In comparison, February 2022 saw a total of 52 condo sales- a 51.92% decrease. If you read last month’s blog post, you’ll know exactly why this is. If we look at the interest rates in February 2022 vs February 2023, we’ll see that the Bank of Canada had an overnight lending rate of .25% in February 2022. February 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 52% 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, January 2023 had 12 sales. That’s a 108.33% increase in condo sales month over month. Again, if you read last month’s blog post, you’re like “I got this. I understand this.” But, if you didn’t, you’re probably thinking to yourself, “Why would there be a 108.33% increase in month over month sales if interest rates were so high? Now, in order to answer your question, we have to look at the Bank of Canada overnight lending rate and how it has been changing in the recent month. On December 7th, 2022, the overnight lending rate increased from 3.75% to 4.25%. Then on January 25th, 2023, it increased to 4.5%. The next announcement for interest rates is set for March 8th, which is today. Now, if you’re guessing that buyers may have rushed to secure a spot before interest rates increase even higher, you’d likely be correct. 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 grab the lesser of the two interest rates.
To sum it up, condo sales in February 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 February 2022 to February 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 February 2023 was $725,970 on the 25 sales. The average sale price for the sales in February 2022 was $855,129 on the 52 sales. A 15.1% year over year decrease in sale prices. In relation to this percentage decrease, we’re going to mirror what we said last month (and the month before… and the month before). Even though prices were down, impressively, by 15.1% year over year, condo transactions still decreased by 51.92%. 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 February 2022 to February 2023 Bank of Canada overnight rates. With such a significant interest rate hike in the picture, even 51.92% 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 February 2023 was $725,970 on the 25 sales. The average sale price for the sales in February 2022 was $855,129 on the 52 sales. A 15.1% year over year decrease in sale prices. In relation to this percentage decrease, we’re going to mirror what we said last month (and the month before… and the month before). Even though prices were down, impressively, by 15.1% year over year, condo transactions still decreased by 51.92%. 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 February 2022 to February 2023 Bank of Canada overnight rates. With such a significant interest rate hike in the picture, even 51.92% 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 January 2023 was $710,283 on the 24 sales. A 2.21% month over month increase in sale price. In order to understand this month over month percentage increase, let’s bring back the month over month percentage increase in condos transactions that we discussed earlier. If you remember, condo sales went up by 108.33% from January 2023 to February 2023, and we referenced that most buyers were racing to secure the comparatively lower interest rate, before it potentially raises 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 February 2023, but demand increased (108.33% 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 second month of 2023 is kind of doing exactly what we predicted it to do. We’re still on this rollercoaster ride of a market and we’ll almost certainly continue on this bumpy ride for the remainder of 2023. What are your predictions? Let us know in the comments below.
Curious how February 2023 differed from the year before? Take a look back at our post for the Liberty Village condo stats in February 2022.
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.
