This past summer the Wellington County real estate market seemed to go on summer vacation. And when the Bank of Canada announced its first of now 4 cuts to the overnight lending rate the hope was the market would respond positively this fall. However, the market remains subdued.

The overnight lending rate affects variable-rate mortgages, lines of credit, and short-term credit. The rate has gone from 5.0% in June to 3.75% as of October 23rd. Sellers have responded to these rate cuts with optimism and listing activity has been at its highest in the last 10 years with 1001 active listings in Wellington County for September according to the Canadian Real Estate Association (CREA).

But Buyers have not followed suit. Weaknesses in the economy and lower consumer confidence seem to be holding buyers back. Consumer confidence while volatile this year has trended downward over the last 12 months while business owners are pulling back on hiring and forecasting slower growth.

As such, sales activity has been relatively flat. CREA says year-to-date home sales are up marginally by 1.7% but prices are down slightly. According to the Home Price Index the benchmark price has dropped year over year by 5%. The MLS® Home Price Index (HPI) tracks price trends far more accurately than is possible using average or median price measures.

The Benchmark average price for detached homes dropped 5% from last September to $897,100, townhomes were down 4.4% to $648,000 and apartment condominiums were down to $520,600 representing a 3.4% decrease.

That being said, the savings rate in Canada remains higher than historical trends at 6.7% according to Statistics Canada. Prior to COVID, the savings rate in Canada was typically 0.1% to 2.9% in the 2000s.

Furthermore, for those who bought a home 5 years ago, those homes have increased in price on average by 48.79% according to data collected from the One Point Association of Realtors. Over the last ten years average home prices have increased by 83.55%.

Fixed Rate mortgages also continue to fall and are at levels that we saw in the early and mid-2000s. We are expecting further overnight lending rate reductions by the Bank of Canada, and for buyer activity and sales to pick up in the New Year.

Given the current market environment and with fewer buyers actively in the market, now might be a good time to consider upgrading your home as the higher end of the market has depreciated slightly more than the lower end of the market.