2023 In Review and 2024 Predictions

Author: Tracy Phelan, Broker RE/MAX Garden City Realty Inc. Brokerage | | Categories: #Beamsville , #BuyingorSelling , #Grimsby , #NiagaraFalls , #RealEstateMarket , #RealEstatePredictions , #SellingNiagaraHomes , #StCatharines , NiagaraRealEstate

Blog by Tracy Phelan Broker RE/MAX Garden City Realty Inc. Brokerage

The Niagara real estate market had been one of the hottest in the Ontario housing sector in the fallout of the pandemic, with home prices soaring about 27 per cent between 2020 and 2021.

Because many households were planting new roots in smaller communities, there was some expectation that the Ontario town could sustain this momentum. However, in recent months, the Niagara real estate market has stabilized as price growth has been modest, and sales activity has plummeted amid an environment of high interest rates.

Now that mortgage rates are expected to come down over the next 12 to 24 months, what does the Niagara housing market look like? Where is it headed? Let’s take a look at how the Niagara real estate market performed to finish 2023 and how industry experts think it will function in the year ahead.

The Niagara Real Estate Market Today

According to the Niagara Association of Realtors (NAR), residential property sales tumbled nearly seven per cent year-over-year in December, totalling 280 units. Last year, home sales tumbled at an annualized pace of 6.7 per cent, with more than 6,000 units exchanging hands. Historically, housing sales were close to 34 per cent below the five-year average and a little more than 31 per cent below the decade average for this time of the year.

NAR statistics also recorded a downward trend to finish 2023. In December, the Home Price Index (HPI), which is considered a more accurate barometer of pricing than average or median price pressures, slipped nearly two per cent compared to the previous year, sliding to $617,000.

Here is a breakdown of the different property categories and their year-over-year price-performance:

  • Single-Family Homes: -1.8 per cent to $629,700
  • Townhome: -1.2 per cent to $594,000
  • Apartments: -4.1 per cent to $431,900

Meanwhile, average home prices were unchanged at around $650,000 in December. On an annual basis, the average price plunged more than 11 per cent to below $696,000.

NAR statistics show that inventory levels were mixed to close out the year. New residential listings fell 11.3 per cent year-over-year, with 407 units. Active listings surged 12.5 per cent, totalling 1,850 units on the market. Historically, new listings were about five per cent below the five-year average, while active listings were 59 per cent above the five-year average for the month of December.

Additionally, the months of inventory, a measurement that tracks the number of months it would take to exhaust current housing stocks at the present rate of sales activity, clocked in at 6.6, up from 5.5 months in December 2022.

Further, new housing construction activity has significantly slowed in the last year. According to the Canada Mortgage and Housing Market Corporation (CMHC), housing starts crashed 73 per cent in December, totalling 27 units. In all of 2023, there were 29 housing starts, down nearly 78 per cent compared to the previous year.

Gazing into the Crystal Ball for Niagara 2024

Over the next year, the Niagara housing sector is expected to be a buyer’s market. According to the 2024 RE/MAX Housing Market Outlook report, the average sales price for a home in Niagara is projected to climb 3.5 per cent to approximately $725,000. Sales activity is anticipated to also rise 4.5 per cent.

Local real estate agents say that single-detached residential properties will enjoy the most demand in Niagara. Plus, prospective homebuyers will likely be setting their sights on Beamsville/Grimsby, Crystal Beach/Ridgeway, and St. Catharines.

Of course, mortgage rates will still play a crucial role in the Niagara real estate market this year.

Not unlike many other regions across the country, interest rates continue to be the most dominant factor affecting local housing market conditions.

What About the Niagara Economy?

The entire Canadian real estate market is taking a breather from the meteoric ascent in the wake of the coronavirus pandemic. But while a broad array of forecasts suggest that the nation’s housing sector is cooling off, it does not necessarily mean this is the new normal.

For the Niagara housing market, the economy could be more sluggish in 2024, which may be a factor in the real estate industry.

The trade association anticipates that the St. Catharines-Niagara economy will expand by about 1.5 per cent, in line with the broader national economy. Growth is then expected to be 2.5 per cent in the following year.

Blake Landry, Niagara Region’s manager of economic research and analysis, expects similar numbers and that the region’s economic growth is expected to be 1.5 per cent for 2024. For he second half of the year, the hope is to see a leveling out of both inflation and perhaps even a drop in mortgage rates.

Until then, it will be a waiting game to determine who blinks first: the sellers or the buyers.