A Look Back at Yellowknife’s Real Estate Market in 2023
It’s that time of year! Time to have a look at how the Yellowknife real estate market performed in 2023. The short version is that 17% fewer homes sold through our local MLS in 2023 than the year prior, which is a decrease similar to many places in the country. But despite having a slower year, our average sale price still went up by 4%. Here is a table full of stats, and then we’ll get into the hows and whys of what took place.
So how did prices rise even though sales dropped by 17%? The main reason is that we have been in a strong seller’s market for a long time and, as a result, sellers are not quick to drop their prices in the face of short-term headwinds.
The reason we know we’ve been in a prolonged seller’s market is because the “sales-to-new-listings ratio” tells us so. This is a metric that the Canadian Real Estate Association uses to measure market intensity. If 55 homes are sold for every 100 that are placed on the market, we are in a seller’s market. If that number gets up above 70 per 100, we are in an overheated market. In Yellowknife in 2022, 87 homes sold for every 100. Yes, this dropped by 6 points last year to 81, but it’s still an overheated market with too little supply to meet demand. This strength is not equal across all market segments, and there are still factors that can bring prices down on a case-by-case basis (read more about this below), but overall we have been in a strong seller’s market for a very long time.
As a result of our market’s long track record of strength, sellers have grown accustomed to holding the line on price, even if they have to ride out the odd short-term disruption. For example, although our recent wildfire evacuation, which took place from Aug 16th to Sept 20th, effectively ended the real estate season and reduced the total number of sales, most sellers and their Realtors viewed it as inconsequential in the grand scheme of things. Our economy didn’t shrink, we didn’t lose any jobs, and there is no new supply of housing coming on the market, so why worry? The evacuation may have delayed some people’s plans to list their homes, but it didn’t impact their price expectations.
One other thing to consider is that when buyers become less enthusiastic, as they do when interest rates rise, sellers don’t simply keep flooding the market with listings. As you can see from the table above, new listings dropped by 11%, so despite there being fewer buyers, they still didn’t have all that much to choose from. And this makes sense when you consider that sellers, even if they sell their current homes, have to buy or rent a home somewhere else. They are buyers too. So, unless they are mortgage free (like many retirees) or are moving somewhere with far less expensive homes, interest rate increases force many sellers to delay their plans.
Will this ever change? Will there ever come a time when we can call our market “balanced?” In my opinion, it would take years of higher listing inventory to bring prices down. We have an example not that long ago of higher inventory, but it only lasted two years from 2019 to 2020, and that apparently wasn’t long enough to impact prices. There was a lot of pent-up demand in the market, the inventory was absorbed relatively quickly (thanks in part to the COVID pandemic during peak season 2020) and now we’re back to very low levels of listings.
How did we manage to get such high levels of inventory in 2019 and 2020? Well, we actually had a lot of new development going on in the years preceding 2019 and it had a big impact on the market. Summit Condominiums added 126 units to the market ending in about 2017, Lakeshore Developments added 190 manufactured homes from 2015-2020, and our municipal government added 29 large lots at Grace Lake South and about 27 smaller ones on Spence Road. People don’t really think about the mid 2010’s as a “housing boom” in Yellowknife, and it probably wasn’t by other city’s standards, but compared to our situation since then, buyers had it pretty good.
As mentioned above, there is one segment of the Yellowknife market that is prone to softness. Year after year when I evaluate the prior year’s sales, higher-end “stick-built” single family homes prove to be laggards. Over the last three years, homes over $800,000 have represented only 6% of all listings, but account for 18% of all expired listings. And those that have sold have taken 36% longer to sell than those below $800,000. In 2023, “stick-built” single family homes actually experienced a price decrease of 10%, but it’s hard to tell if this is a true decrease, or if it’s a result of a different mix of sales. This is a common problem with our NWTAR statistics because our sample size is so small. A closer inspection of the detailed list of sales suggests this is at least partly the reason for the decrease – there seem to have been a lot of listings from older neighbourhoods or with smaller square footage.
So what lies ahead? This will be an interesting year. Nationally, forecasters are predicting a hotter market because they expect interest rates to come down. And locally, as mentioned above, we may have a bump in listings as a result of people having to delay their sales due to the evacuation in August and September.
And I guess if there is a million dollar question, it is whether or not high inflation coupled with the evacuation will result in people throwing their hands up and leaving the North. I think a lot of us in the industry expected a lot of people to be having these types of conversations around their dinner tables, but so far it hasn’t materialized to anywhere near the extent we expected. And while it’s too early to be sure, it doesn’t seem like it will have much of an impact on our market.
A huge thanks to our clients for making us the #1 brokerage in Yellowknife for the fourth year in a row! Last year we were fortunate to rank #1 in homes sold, buyers represented, average days on market and sale price as a percentage of original list price. If you’re thinking of selling in 2024, our team of experts is here to help. And the sooner you contact us, the more value we can add to the process!
