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CONDO REPORT: Interest rates created challenge for sellers

Demand still relatively low and inventory high heading into new year, creating some good opportunities for buyers, says columnist
Condos at the Barrie lakeshore.

The 2023 condominium market was challenging for sellers in Barrie.

The market slowed down quite a bit after interest rates increased by two per cent over the last half of 2022 and into January 2023.

With such a large increase in the cost of borrowing, many buyers could no longer afford to purchase real estate and chose to put their property search on hold until the market reacted and prices came down.

The first half of 2023 was more active than the second half, where the Barrie condo market experienced waves of interest from buyers. Some weeks were extremely slow with very little action on listings while other weeks had an increase in appointments and offers on properties.

Most of the active buyers were those who were already locked into an interest rate and were looking to close on a property prior to their rate hold expiring.

As we moved through 2023, there were two additional rate hikes mid-year and with the threat of more to come, consumer confidence continued to drop.

Buyers were questioning what was in store for the real estate sector for the remainder of the year and did not feel comfortable purchasing when the market was so unpredictable.

Prices started to come down during the summer and if interest rates continued to rise throughout the fall, there was a chance the market could soften tremendously in the final quarter of the year. So, many buyers chose to be cautious and put their property search on hold.

These market conditions were very tough for sellers. With the increase in interest rates, demand was down for most of 2023 and the buyers that were in the market were in no rush to make a decision.

This left sellers with minimal viewings being booked which caused many to reduce their asking price in order to attract buyers and remain competitive.

Although rates remained unchanged during the final quarter of 2023, most buyers continued to hold off on purchasing property and watched the market closely while they waited for the various 2024 real estate forecasts to come out.

Let’s see what happened in the Barrie condo market year-over-year for the month of December.

December 2022:

  • The average sale price for condo apartments sold was $501,875
  • The average sale price for condo townhouses sold was $544,500
  • Units were selling for an average of 96% of their original list price
  • Average days on market for the whole condominium sector was 32 days
  • At the beginning of January 2023, there were approximately 50 condominiums for sale in Barrie

December 2023:

  • The average sale price for condo apartments sold was $508,859
  • The average sale price for condo townhouses sold was $468,333
  • Units were selling for an average of 97% of their original list price
  • Average days on market for the whole condominium sector was 32 days
  • Currently, there are 105 condominiums for sale in Barrie

Year-over-year for December, the average sale price for condo apartments increased by 1.4 per cent and condo townhouses decreased by 14 per cent.

Barrie has started off 2024 with double the condominium inventory on the market than this time last year, but there could be increased buyer demand in the market with the potential of interest rates coming down.
Things to consider when going into the Barrie real estate market in 2024:   
1. Get into the market sooner rather than later. Buyers currently have an advantage with negotiations. With property inventory being high and demand low over the past year, buyers have been in a great negotiation position with sellers. Properties have been selling for under the list price and buyers have been able to put multiple conditions in their offers to protect themselves.

This could change if the interest rate comes down in 2024, with predictions of the first rate cut to happen as early as April. If the cost of borrowing becomes more affordable, the demand for real estate could increase.

Buyers that have held off on purchasing real estate over the past couple of years may begin to resume their property search as they continue to see signs of the market stabilizing. This increased demand could create multiple bids on properties which would then put upward pressure on prices. So, the money saved by waiting for the lower interest rate could end up going toward the increased cost of purchasing.  

With demand still being relatively low and condo inventory high at the moment, there are some good opportunities for buyers to purchase while the market is still slow.

2. Consider listing now. Although prices may increase mid-year as a result of an interest rate drop, there may be a lot more inventory this spring than usual. The combination of 2023 inventory that did not sell and the new inventory of 2024 could create more competition for sellers than in previous years.

For sellers, if the competition is high in both the area and property type but the buyer demand does not satisfy the surplus of inventory, there is a possibility that the unit could sit on the market longer, which could have a negative effect on the sale price.

3. Make sure you are working with a Realtor who understands the new legislation that went into effect Dec. 1, 2023  the Trust in Real Estate Service Act (TRESA)

If you are a seller, there are many new rules and opportunities when working with multiple offers under TRESA. There no longer has to be blind bidding. That means, you can share some parts of the offer, like the offered price, with other buyers that also have a registered offer on the same property.

If you are a buyer, you now have the option to purchase real estate as a self represented party or you can choose to retain a Realtor’s services and sign a Buyer Representation Agreement.

4. Hire a condo-specific Realtor to assist you with your condo sale or purchase. The market trends in the freehold housing market are quite different from the condo market, so it is best to get advice or guidance from someone that works in the Barrie condo market regularly.

* All stats are based on listings sold with the Toronto Regional Real Estate Board

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Ashley Lamb

About the Author: Ashley Lamb

Ashley Lamb is a local condo expert who writes a monthly column about statistics and trends in the Barrie real estate market
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