Real Estate & COVID-19, Part 2

BY SCOTT MOORE, REALTOR

This is a follow up to my first post on real estate and COVID-19 written in June 2020.

If you’ve been to a post-covid soccer practice, dinner party, or dental appointment, the chances are pretty good that you’ve been part of a discussion about how the real estate market is doing.

Pretty much everyone knows the market here in Winnipeg has been hotter than ever, but not very many people know why that’s happened, and even fewer know where we’re going from here.

Full disclosure, if I knew exactly what’s going to be happening in the future of the real estate market, I would be on an island in the Bahamas right now, but nonetheless, I’ll wade in and give you my most educated guess.

First of all, prices in Winnipeg topped out at the peak of the pricing curve (which is looking like it was in May of 2021) at close to 20% higher than the year prior. Driving this was a huge reduction in inventory in the range of 40-45% sustained through fall 2020 and into spring 2021. This was caused by families that naturally would have listed their homes holding off, meaning there were far fewer homes available for sale than there should have been.

At the same time, there were way more buyers than usual—particularly first-time home buyers lured into the market by low interest rates and with bigger down-payments thanks to a year without spending on travel and lifestyle, so the bulk of the pressure was initially in the starter homes at the $300-400k price points.

People who already owned homes were drawn to the market for the same reasons but also because many found that while working, schooling and living at home 24/7 their current homes didn’t meet their needs. We saw huge demand for home offices, home gyms, big yards, pools and just generally larger homes.

Homeowners also recognized that the combination of high resale pricing for starter homes and low interest rates meant that market conditions were perfect to make the jump from the starter home to the lifetime home—so as the spring pushed into summer, we started to see the pressure increase into the $450-$600k range. We have only rarely seen market conditions supporting multiple offers into this price point in Winnipeg, and suddenly these homes were in hot demand with many offers, and sale prices well over list price.

As for what’s going to happen from here, I think the gains in pricing that we have seen this year are really specific to the market conditions and I don't expect them to hold out indefinitely. Prices have fallen slightly since the peak in May, which makes sense--all the people that delayed selling due to covid have brought their homes to market, so inventory levels are rebounding. More supply naturally takes some of the pressure off the demand, so as we get into 2022, I expect the supply to continue to increase, which should stabilize the demand further.   

The good news for everyone that bought a home in this period of low supply, or for people thinking about selling soon, is that no one is forecasting a decrease in pricing—we will stop seeing the dramatic gains as the supply/demand stabilizes, but pricing should remain relatively stable at current pricing. That being said, if you are thinking of selling, there is not a single doubt in my mind that sooner is definitely better.

There is no doubt that the market as a whole is extremely volatile right now and if you are planning to buy or sell in this market, you absolutely need an experienced, locally-knowledgeable realtor to navigate you through these incredible unpredictable times. If you have any real estate questions, feel free to reach out to me directly at 204 995 7355.