Christmas is just 1 week away.
We caught our little guy on the monitor the other day singing jingle bells to himself. If I wasn't in the Christmas spirit before hearing that, I am now!
I hope this Christmas and New Year is a healthy and happy one for you and yours.
On the real estate side, the end of the year comes as a bit of a relief. We made it! It was a very challenging year for homeowners and real estate professionals alike.
What does 2023 hold?
A common question I keep getting is this one:
When do you think people will start defaulting on their mortgages? Do you think a lot of people are going to lose their homes in the coming year(s)?
It's a timely question and one that has pushed me to do some digging. I've been looking for a way to get insight into how well homeowners are keeping up with their mortgage payments.
I finally found it this week.
The CMHC publishes quarterly statistics on mortgage delinquency rates. They do it for the nation, the provinces, and certain major cities. You can find it HERE.
The numbers demonstrate something we know to be true: Canadians are amazing at paying their mortgages.
The mortgage delinquency rate in Ontario this past quarter was 0.07%, the lowest of any of the provinces.
In Toronto that rate was 0.06% this past quarter.
What's more interesting is the trend we've seen over the past few years.
You'd think with the economic conditions and rising rates that mortgage delinquencies would be on the rise. That's not the case, at least not yet.
Since the beginning of covid delinquencies in Ontario have actually dropped from 0.14% to 0.07%.
In Toronto, they've dropped from 0.11% to 0.06% over that same time.
While these are small increments it demonstrates the fact that delinquencies are NOT on the rise.
Homeowners are keeping up. That includes those homeowners who took on variable rates this past year or two and have felt the full impact of these 7 rate hikes. They have not gone delinquent on their mortgages. They either switched to fixed or they've found ways to cut their own spending to make their higher payments.
But what about those mortgages that are coming up for renewal this year?
These are the owners who took on 3-5 year mortgages between 2018-2020. Aren't they the ones who will be feeling a lot of impact from these 7 rate hikes?
Certainly, it'll be a shock for these owners but that impact may be smaller than you'd think.
If we go back to 2018 the average 5-year fixed rate was somewhere around 3%. It's now closer to 5.5%. So while that's a big jump, it's not nearly as big as the 1.5 to 5.5% we've seen in variable rate holders this year...who, as I mentioned, are making it work as of now.
Not only that, purchase prices in 2018 were significantly lower than today's prices, even with our recent pullback. Meaning their mortgage amounts are smaller to begin with.
All to say, I think rates will have to rise much more before we got into the territory of serious delinquency numbers that could increase supply and drive prices down.
We've seen the interest rate hikes soften demand significantly this year. That resulted in the pullback we saw. But prices have plateaued in recent months.
For things to fall further we'd need to see a big bump in supply. I'm not sure I see that happening as a result of delinquencies rising for the reasons mentioned above.
My thinking is that unless rates balloon way above current values (ie 8-10%), the large majority of Canadians will find a way to make that mortgage payment...as they always do.
Bottom line for sellers: December is a month to enjoy your Christmas and time with your family. Not to sell your home. If you're thinking of selling use this time to prep your home to be ready for January. That's your next best window. Keep an eye on the business news and sales in your area between now and then for any indicators of whether you need to wait further.
Bottom line for buyers: Keep your search going this month. You'll likely have less to look at but there are way fewer buyers out there right now. Pro-tip: Have your realtor look at recently terminated listings that didn't sell at the end of the year. These owners will likely be looking to re-list in the new year. If your realtor can get you in to see the home ahead of that while the home isn't listed you could find yourself in a unique negotiating position.
That's it for this week...onto week 15.
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Checkout the weekly stats below for each of our micro-markets.
Have a great day!
Aurora Freehold
*Prices based on Last 4 Weeks Running Average
Average price Detached (23 sales): $1,403,800
Median price (23 sales): $1,230,000
Average Days on Market: 19
Sales in the past week: 9
Average Price Semi-Detached (1 sales):$1,350,000
Median Price (1 sales): $1,350,000
Average Days on Market: 14
Sales in the past week: 0
Average Price Townhome (4 sales): $1,001,500
Median Price (4 sales): $982,500
Average Days on Market: 10
Sales in the past week: 1
Total firm sales in the past week: 10
Current Listings: 74
Months of Inventory: 1.18 (less than 4 indicates seller's market)
Aurora Condo/Condo Townhomes
*Prices based on Last 4 Weeks Running Average
Average Price (6 sales): $811,667
Median Price (6 sales): $702,500
Average Days on Market: 17
Sales in the past week: 0
Current Listings: 21
Months of Inventory: 1.47 (less than 4 indicates a seller's market)
Richmond Hill Freehold
*Prices based on Last Weeks Average
Average price Detached: $1,506,111
Median price: $1,550,000
Average Days on Market: 19
Sales in the past week: 9
Average Price Semi-Detached: $884,500
Median Price: $884,500
Average Days on Market: 8
Sales in the past week: 2
Average Price Townhome: $1,244,600
Median Price Townhome: $1,270,000
Average Days on Market: 18
Sales in the past week: 3
Total firm sales in the past week: 14
Current Listings: 229
Months of Inventory: 1.68 (less than 4 indicates seller's market)
Richmond Hill Condo/Condo Townhomes
*Prices based on Last Weeks Average
Average Price: $659,462
Median Price: $650,000
Average Days on Market: 31
Sales in the past week: 13
Current Listings: 166
Months of Inventory: 2.91 (less than 4 indicates a seller's market)
Newmarket Freehold
*Prices based on last 4 weeks Running Average
Average price Detached (42 sales): $1,216,490
Median price (42 sales): $1,192,500
Average Days on Market: 23
Sales in the past week: 8
Average Price Semi-Detached (5 sales): $854,200
Median Price (5 sales): $820,000
Average Days on Market: 10
Sales in the past week: 0
Average Price Townhome (9 sales): $943,000
Median Price (9 sales): $932,000
Average Days on Market: 16
Sales in the past week: 2
Total firm sales in the past week: 10
Current Listings: 105
Months of Inventory: 1.24 (less than 4 indicates seller's market)
Newmarket Condo/Condo Townhomes
*Prices based on last 4 Weeks Running Average
Average Price (15 sales): $748,108
Median Price (15 sales): $720,000
Average Days on Market: 19
Sales in the past week: 3
Current Listings: 15
Months of Inventory: 1.36 (less than 4 indicates a seller's market)
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