Centre Wellington Real Estate Outlook 2024: Trends and Predictions

Well, it's 2024, and our local Centre Wellington Real Estate Market is certainly ready for the New Year. 2023 left me with a strange taste in my mouth. Shifting from a strong sellers' market (rather abruptly in late 2022), 2023 brought a steady decline in buyer activity and inventory here in Fergus and Elora.

What happened in 2023?

With interest rate hikes, buyer confidence fell through the roof. The idea of "waiting for a crash" that never came kept buyers hesitant to make a move, and rightly so. We never did see the drop in prices some of us had expected. Indeed, things came down from the peak of the COVID buying frenzy, but I don't think they fell to where most buyers were hoping. Coinciding with mortgage interest rates and still relatively "high" prices, many potential buyers kept their eyes on the market but never bit the bullet.

That said, homes still sold, just not at the rates we were used to. When you thought a home listed over market value, someone would swoop in and buy it. Creating a delusion for many future sellers that their home is worth more than the market is dictating. To be honest, it was hard to argue otherwise. It almost became the strategy to list a bit higher than the market dictated and drop the price in a week or two if there wasn't any activity. It's not my preferred method, but it's hard to convince sellers they aren't potentially leaving money on the table if they don't list at that higher price.

So, where does the Fergus Real Estate Market stand going into 2024?

The market just before the holidays, as usual, was slow. Showings dropped off, and very few houses sold in Centre Wellington between December 1st and 31st. With only 18 sales across Centre Wellington in December 2023, it was the lowest month of the year.

As soon as New Year's passed, showings started to pick up, and buyers began to come out of hiding. Within our brokerage, we had a few listings that only had one or two showings in late 2023. Since the turnover into the new year, those listings have already had a few showings booked.

I've been contacted by a few clients who had gone silent for the past six months and are now ready to start looking again. It's a good sign for sellers who were prepared to call it quits after 60+ days on the market. Although things might be looking up for sellers, it might become a more challenging market for buyers.

Thinking of Selling Your Fergus Home in 2024?

As I stated in my opening sentence. 2024 is going to be an unpredictable year for Centre Wellington Real Estate. The most significant factor is interest rates. As I'm writing this, it's 1:30 pm on January 4th, 2024, and the consensus is that the Bank of Canada plans to drop rates slowly starting in spring 2024.

The trend seems to be that as interest rates increase, housing prices drop, and buying activity slows. This would lead you to believe if the interest rate drops, prices will increase, and buying activity will go up...right? Well, maybe..?. I think that at the first sign of interest rates dropping, buyers' confidence will shoot up, and they will start buying again. This will drive up prices and competition for listings.

The only argument for this is inventory. I know many sellers are holding out for the spring market to catch some of this potential buyer wave. So, if a significant influx of inventory hits the market all at once, it could offset any increase in buyer activity. I don't think that will be the case because all those buyers just waiting on the sidelines are getting more impatient, and that list of waiting buyers is only getting bigger.

So, what does that mean for sellers?

Now, with all that said, I don't believe we will get anywhere near the Covid bubble activity level. I think we are currently in a buyer's market. With the potential influx of inventory and interest rate drops this spring, we would ideally move into a balanced market. This is the ideal outcome for everyone. A seller's market would be great for anyone considering listing in 2024. I just don't think the pull from buyers will be that extreme. That said, I have high hopes it will be a much better-selling market than 2023.

Thinking of Buying a House in Fergus in 2024?

Interest rates might drop! Best to wait until they do! Right...?
I have always thought that if you're ready to move, can afford the house you want, and have found a home you like, just buy it. The longer I work in real estate, the more accurate this becomes to me. Interest rates might seem high, but we are currently in a buyer's market in Fergus and Elora. This is a massive benefit for anyone presently thinking of buying.

In the current buyers market, a buyer has a lot of control over the negotiations. Many sellers are just hoping for a showing, let alone an offer. Suppose you're a buyer who doesn't have a house to sell. In that case, you are essentially holding a golden ticket when negotiating.

You can negotiate in your favour - closing dates, deposits, offer price and conditions. Whether you like it or not, firm offers are a thing. A buyer can offer on a house with little to no protection for themselves. In this current market, you don't have to do that. You can protect yourself from here to the moon. Condition of inspection, financing, specific inspections (septic, furnace, roof, foundation, etc). These are all great things that a buyer can use to protect themselves. The most significant advantage is NO COMPETITION. Competing offers drive up prices and push us into those firm offer situations. As a buyer, it's great if you can avoid those situations. So, currently, you're probably paying a higher mortgage rate, but on the other hand, you don't have to make offers $100,000 over asking without any conditions (buyer protection). So, in the current market, it's a great time to be a buyer. The ball is in your court.

What if I'm planning to buy later in the year?

That is today's market at 4:30 pm, January 5th (I'm a slow writer). If interest rates drop at all in the spring, there is going to be a large group of buyers who are coming out of the woodwork. What does that mean to you as a buyer? Competition and prices are bound to increase.

With more competition, you lose those protections and leverage in your offers. Your hand starts being forced to offer more money and fewer conditions, bending over for the seller's demands.

In short, holding out for lower interest rates might not be the best move for a buyer. You're forced to take more risk in your offer and pay a higher number for the house.

Again, back to my point, buy when you're ready. Don't try to time the market. The grass is always greener.

Remember that this is purely my gut feeling on where we are heading. I have no crystal ball at home. I will happily eat crow if I'm way off.

Timeline Summary of my 2024 Fergus, Elora Real Estate Market Prediction.

Things will pick up slowly regarding sales and buyer activity until March. Prices will stay the same, but the general amount of sales and inventory will slowly grow.

A significant influx of inventory will hit the market in late March or early April. On the heels of the first potential rate decrease, Sellers will want to list and be on the market to take advantage of the increase in buyer activity. Buyers will be active, hoping to beat any rush that might hit late spring.

At the end of April, if rates drop, a noticeable increase in buyer activity will follow through into May-July, causing an increase in overall sale price. The market will shift temporarily to a seller's market only to balance out around August/September.

If rates drop again, the same thing will happen: a small spike in activity for a few weeks until the excitement of the "cheaper" monthly payments wears off. Then, it will settle again to a balanced market. This trend will carry us through into 2025.

Quick summary:

• Dropping interest rates will have the most significant effect on the Centre Wellington Market.
• An influx of inventory looks pretty likely in the spring.
• I don't think there will be a good or bad time to list this year. When you're ready to sell, just list.
• Buyers may see more competition with offers come spring, but no crazy frenzy like a few years ago in Covid. If you are ready to buy right now, it might be best to avoid competing offers. Take advantage of the current buyers' market before that first interest rate decrease.
• I think we will see a slight increase in average sale price compared to Centre Wellingtons 2023 average sale price of $867,000.

My Disclosure

Should you find the irresistible urge to highlight any discrepancies in my predictions throughout the year, I invite you to visit krisbutler.ca. There, you can view comprehensive sales statistics for Fergus, Elora, Guelph, Arthur, Mount Forest, and the surrounding communities, providing ample material for you to tell me how wrong I am.

Whether you're looking to buy your dream home or sell your current one, I am here to help you every step of the way. Don't hesitate to reach out and start your journey in the 2024 Fergus/Elora Real Estate Market. Let's make this year a milestone for your real estate goals!

Kris Butler - Fergus Realtor®