The Reiss Report

Sales outlook bright for 2024

Condo sales ended 2023 on an optimistic note

Canadians everywhere, including Manitobans, took a pause on real estate last year. The main reasons were tougher interest rates and an overall preoccupation with reining in high inflation and wrestling with cost-of-living increases on essential items such as gas and food. It’s important to note, however, that the last five months of 2023 showed much better adjustment to what was happening, as three of the months after July outperformed 2022 in total MLS sales

In its second quarter report, the Bank of Canada indicated it may hold off on increasing its key interest rate again from the current five per cent. This is due to evidence indicating the economy is cooling and there has also been a cooling in Canada’s housing market and prices. This cooling continued in the third quarter. While a rate hike has not been conclusively ruled out, it does not appear there will be any further increases in the prime lending rate this year. However, do not expect rate cuts any time soon.
 

We are seeing another year impacted by rising mortgage rates and in July the Bank of Canada increased the overnight rate for the 10th time since March 2022. At that time, rates were rock bottom at 0.25% but now they sit at 5%, the highest they have been in 22 years. Despite the rising interest rates, condominium activity in the local market is weathering the rapid rate hikes surprisingly well, based on June market results.

For the first time we have had two consecutive sales years in which the condo market activity within the Winnipeg Regional Real Estate Board (WRREB) market region exceeded the 2,000 unit threshold.  It should not be all that surprising that we are unlikely to see a  repeat performance in 2023, given the interest rate environment we are in. Consider the effect of the eight Bank of Canada interest rate increases in 2022, followed by another one this year, resulting in the overnight lending rate of 4.5%. Other factors have contributed to the sentiment that we are unlikely to repeat the performance of the past two years. 

Now that we are well into January, Valentine’s Day is nearly upon us.  No doubt many loved ones will be receiving cards and flowers as part of that special occasion.  2022 was a ‘special occasion’ with respect to condo sales, not that I am suggesting you send a card for this!  In 2022, condo was the one property type which proved to be the most resilient during a very challenging year, and while not as spectacular as the record shattering 2021, was still worthy of recognition (if not a card).

IMPRESSIVE CONDO SALES IN 2021

There’s a saying that many of us are familiar with: what a difference a year makes.

Well, the passing of one year has made a huge difference in condo sales. Even though sales in March 2020 were decent, the solid numbers from one year ago were blown away by March 2021 numbers. Once all the dust had settled, March 2021 – there were 397 new listings this year compared to 329 the year previous - this proved to be the best-ever month for condo sales in Winnipeg, with 288 listings being sold.

We are coming off a spectacular year in 2021 where condo sales skyrocketed 39% from 1,847 in 2020 to 2,572 in 2021. This is a clear indication of preferences shifting with first-time buyers in particular finding condos a more affordable housing option which they can manage. Even with the supercharged demand for condos in 2021 the annual average sales price only went up a modest 2% to $244,957.

No matter which way you cut it, the number of sales is phenomenal. Compare it to the best previous year – 2014 – and it blows it away with nearly 400 more sales, as 963 condominiums were sold during the first six months of that year versus 1,376 this year. Percentage-wise, the first half of 2021 still works out to be 43 per cent better than sales from seven years ago!

CONDO REAL ESTATE BLOG: WITH THREE MONTHS TO GO BEFORE THE END OF THE 2021 SALES YEAR, THE CONDO MARKET REMAINS HOT.

The fourth quarter of condo sales activity reaffirmed the momentum and impressive condo sales activity which commenced in earnest in the latter half of 2020. It never let up in 2021 and this was certainly evident in the last three months of 2021 with sales up 12% over the same period in 2020 when condo sales were surging in comparison to 2019. Comparing fourth quarter 2021 to the same quarter in 2019 shows a 53% jump in condo sales.

CCI CONDO BLOG: FOUR FACTORS FUELED RECORD SALES IN 2020

While 2020 was a difficult year in Manitoba – the COVID-19 pandemic saw to that – 2020 was a very good year for condominium sales. In fact, it was a record year. A 5.5 per cent increase in sales saw a total of 1,847 units sold in 2020, up from 1,750 units in 2019. That broke the previous record of 1,798 units, which was set in 2014.