What Just Happened to the Mississauga Real Estate Market in 2022?
I’ve been looking back at the last five or six years of these annual posts and it’s quite astonishing how quickly sentiments and the market change even in hindsight.
Multiple offers, bully offers, insane levels of FOMO, everything getting appraised despite clearly being overvalued…you name it, it happened in the first 3 months of 2022.
It all sort of fizzled out. But, it wasn’t the car crash everyone expected. There were periods of inactivity but buyers were still out there. Homes were still selling – and not necessarily at a heavily discounted price. But as the year went on, things just kept gradually sliding month by month from the peak and we here we sit in late December 2022 at about 20%-25% lower overall pricing than the peak in Jan/Feb 2022.
You might say…20-25% – that’s a lot!
Sure, it’s a lot but that just basically brought us back to Fall 2021 pricing! Anyone who bought a home in 2020 is still “up” by quite a lot. Except those who bought pre-construction with the hopes of not closing and just assigning it (but that’s a topic for another blog).
Let’s take a look at the final numbers in 2022 and then we’ll jump into what I think the 2023 Mississauga real estate market will look like.
So, How Did We End 2022?
- Prices Are still DECREASING…across all segments
Data is a funny thing. If you look at the year-to-date column, you’d have no idea the market has come down 20-25% across most segments as the beginning half of the year skews the average price throughout the entire year. Instead, look at the month over month numbers to tell the story and compare months/quarters from the previous year. Here we see a marked drop in prices, increase in inventory, listings, time it takes to sell and a big drop in the amount of sales.
- Sales Are DOWN, Listings are UP
The record number of sales and extremely low inventory that characterized 2021 and early 2022 are gone. While you could say there is still a lack of “good” inventory in the market, the numbers have certainly flipped. While new listings have slowed, take a look at the number of active listings – an increase of 222%.
- Average Days on Market are UP & Inventory is UP
The months of inventory hit a staggering 0.8 months in December of 2021. It got worse in the first two months of 2022 but has since more than doubled. It’s still not enough to truly be considered a “buyer’s market” according to the data though. It will most likely take another year for the numbers to approach a real buyer’s market.
3 Predictions for the 2023 Mississauga Real Estate Market
1) Prices will go down again…
Pretty easy call I think this year, right?
The Bank of Canada has said they will look to pause on rate hikes later in 2023 but the next announcement in January is all but assured to be another increase of at least 0.25%. Higher rates = higher cost of borrowing = lower home prices.
How much will they go down? The million dollar question (has inflation made this the $10 million question by now?) as always. I’ll ponder a guess – prices will only slightly drop with every rate increase. I think things will relatively stay steady and we’ll see a small clawback under 3% over the entire year.
2) We’ll see the return of multiple offers
This sounds super unintuitive. Surely higher rates and more listings on the market means the multiple offer is dead, right? Unfortunately, what happens in markets like these (and we saw it in 2017) is that a lot of sellers retreat to the sidelines while those looking to get out or ones who feel they missed out will try to cash out. A lot of these homes that have not been well-kept or were rentals etc suddenly look terrible like when the lights come on after last call at the club.
The ones that are well-kept, well-upgraded and well-marketed, will stand out and that means you might be paying a “premium” (compared to what the overall stats are telling us) or you’ll find yourself in competition as buyers that were waiting for the “perfect” home rejoice that one has finally hit the market. But, fear not, you’ll still get to include conditions like home inspections and financing. If not, walk away.
Couple that with realtors not having a lot of tools in the listing toolbox and I think we’ll see a lot more multiple offer scenarios. This strategy will be used a lot by realtors trying to sell terrible properties, but ignore those – they won’t sell and if they do they’re someone else’s problem. I guarantee you though they won’t sell for anymore than they would have if the realtor just understood the data and priced it accordingly.
3) An interest rate peak will hit in 2023
At some point we’re going to hit the interest rate peak in 2023. For all you sad variable rate mortgage holders, the pain will end. And all you fixed rate holders who are up for renewal in 2023…you may find some luck as I think the banks are going to make the fixed rate enticing enough as people are now scared to death of variable. I’m not a mortgage agent/broker and all of this is my own personal opinion and shouldn’t be taken as advice. I’m just here along with you all hoping the pain ends.
The Wrap Up
2022 was once again a wild, wild ride. Much like 2017, there was finally an event that cooled the market. This time it was the unprecedented rate hike. What will 2023 have in store for us? As always, my advice is don’t stretch your budget, buy what you can afford when you can afford it because as fun as these predictions are to make the truth is no one has any clue what will happen in the future.
Good luck hunting, selling or investing in 2023 and remember real estate is a long game…
Photo credit to – Christian Schnettelker – www.manoftaste.de