Market Review: March 2022
Another month of 2022 is in the books and Yellowknife’s real estate market is struggling to get out of the gates. The demand is there, buyers are eager to find homes, but the volume of new listings is very low compared to last year. There may be a COVID-19 explanation for this. Last year, relatively few people left town for March break compared to what we are historically used to. But this year it seemed like half the city headed off to warmer destinations. The chart below shows it best. You’ll notice that last year’s peak in new listings occurred in March, but the five-year average (the grey line) shows that a peak in May is more typical. It seems reasonable to predict that’s what we will see again this year.
Homes continue to sell extremely quickly, with the monthly “Days on Market” stat coming in at a mere 26 days. Anecdotally, we are seeing a lot of unconditional “all cash” offers so far this year, with homes being flipped from “For Sale” to “Sold” without the usual “Sale Pending” period. While this is a bit concerning and not something we recommend for most buyers, it is worth noting that, so far, we are not seeing a lot of offers, all cash or otherwise, well above the asking price. For many vendors, an offer above asking that is conditional on financing is more appealing than an “all cash” offer, but the really high offers that we saw last year don’t seem to be there so far this year. This may just be an anecdotal observation without a proper statistic to back it up, but it’s something our team is watching closely. With at least two more interest rate increases expected this year, price appreciation may not continue the torrid pace we have become used to since the start of the pandemic.
The dip in average sale price last month was likely due more to sales mix than a longer-term trend. Last year there were more high-priced listings on the market in March and when they sold the average sale price was skewed higher. So far this year we have seen very few newer and larger homes brought to market. Until that happens, we can expect the average sale price to remain low.
The inventory story continues to be much the same. Inventory is so low that, in a move unprecedented in the last decade, yesterday the Northwest Territories Association of Realtors members voted unanimously to lobby Yellowknife City Council to bring new land to market. The NWTAR has not yet articulated its position, but the gist of the concern is that we have a whole lot of construction planned in Yellowknife this year and 69% of local companies are currently hiring. We need places for these people to live. The resale market simply won’t meet these upcoming needs and neither will the rental market with vacancy rates already low and dropping daily. These newcomers may not all be likely candidates to build brand new homes in areas like Grace Lake (one of the only areas that could likely be brought to market quickly) but new construction would free up lower-priced listings in other parts of town as people move up the housing ladder. Stay tuned for more on the NWTAR’s position on this.
