It’s the end of the year, which means it’s already time for our 2022 Barrie year in review! 2022 was a busy year for changes within the real estate and mortgage industries. We experienced several interest rate increases, housing price fluctuations, and ongoing inflation. While we can’t cover everything, we want to point out a few highlights. Here’s a look back on the year, and what we expect to see in 2023!
Here’s what happened with interest rates
The Bank of Canada made several important announcements this year regarding interest rates. After two years of record-low rates to help our economy recover from COVID-19, the central bank finally started raising interest rates again. Throughout 2022, we experienced seven rate hikes. The current overnight rate is 4.25 per cent, a big jump from the 0.25 per cent we started the year with.
Two years of cheap borrowing resulted in a very inflated economy here in Canada. Housing prices skyrocketed, as did the cost of goods. You aren’t likely to forget the feeling of paying for groceries this year anytime soon. The Bank of Canada introduced its rate hikes to curb inflation and discourage excessive spending. We will review how this affected the housing market below!
The impact on purchases and sales
How did the Bank of Canada’s actions impact real estate? At the beginning of the year, we were dealing with record-high housing prices and very low supply. As interest rates increased, however, demand for housing dropped off. With the days of cheap borrowing falling away, entering the housing market was no longer such an urgent priority.
This drop in demand, of course, resulted in a decline in housing prices. We saw this here in Barrie, and in most markets across the country. At the time of writing, the average property price in Barrie is $705K, according to Zolo. This is a 15.7 per cent year-over-year decrease, meaning homes were much pricier one year ago. Since sales have slowed down, and fewer buyers are putting in offers, sellers have had to begin selling their homes for less inflated prices.
Supply and demand in Barrie
Let’s take a look at current market conditions in Barrie, and how they have evolved throughout 2022. As we mentioned above, the average housing price has fallen quite a bit over the year. Even on a monthly basis, the current prices are 4.1 per cent lower than last month. Meanwhile, the gap between inventory and sales has widened. In January, there were 116 sales with only 124 units of inventory. Currently, we are looking at 122 homes sold in the last 28 days, compared to 386 new listings.
Homes are also spending a longer time on the market, and are selling at a 96 per cent selling to listing ratio. This means on average, homes are selling for below the asking price.
What should we expect in the new year?
Looking ahead to 2023, there’s definitely some uncertainty about what to expect. However, there are some predictions economists have in common. For starters, we are likely to experience an economic downturn. While this might seem scary, you can do a couple things to prepare yourself. For example, we recommend creating a realistic budget for the new year to prevent unnecessary spending. You should also have an emergency savings fund to fall back on. Many homeowners also have equity built up, and can perhaps take advantage of it with a refinance. This brings us to our next point – what rates will do next.
Many experts agree the Bank of Canada is approaching the end of its rate hikes. Should we hit a recession, interest rates will drop once again. This will help people with variable-rate products, and it may also allow homeowners to refinance for a lower rate.
The housing market will likely experience a slow start. Interest rates will have yet to drop, and winter is already a less busy season for buying. If you’re thinking about buying in 2023, the winter months will have less competition, and likely lower housing prices.
Our Barrie 2022 year in review can only capture a fraction of the events that took place this year, but these highlights are the essential points to know as we enter 2023. As always, thank you for another great year, and for your continued support! We love providing our clients with the best mortgage services possible, and we couldn’t do it without you. Have a safe and happy holiday season, and we’ll see you in the new year!
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*All data from Zolo.