The Trend Report
Each month, Nick and the Team point out one important trend that we’re seeing in the local Real Estate market, and how it affects you if you’re making a move or investing.
The Trend: Going Smaller
In 2023, we saw townhomes, semi-detached and condominium properties selling faster than single-family detached homes. Expect that to continue and the difference to increase even further in 2024 as homebuyers, especially first-time homebuyers, choose smaller properties.
Typically, the pace of sale for detached and attached homes is similar, while condominium properties of all types tend to take longer to sell. We measure this in CDOM, or “Continuous Days on Market.” Unlike a simple Days on Market measure, this accounts for properties being briefly re-listed at a new price to appear to be a “fresh” listing.
At the end of 2023, the CDOM for all types of homes was 52. The highest point in 2023 was January, at 58. The lowest was 15 in June.
Interestingly, we saw a bucking of the typical trend, with detached homes taking notably longer to sell than attached properties or even condominiums. For reference, the CDOM for each type at the end of the year was 58 for detached, 43 for townhomes or semi-detached homes, and 43 for condominiums.
Single-family homes were still the largest number of homes sold for a single type at 5,411, but the other types together were larger together and growing, finishing the year at 6,472 homes sold.
The overall market trends were even more pronounced in new construction homes, which make up a small but important part of the market, with a clear shift over the past year to smaller homes.
The first and most likely explanation is simply affordability. As home prices continue to be well above pre-pandemic levels along with interest rates, the cost of ownership has gone way up. This affects first-time homebuyers most of all, who tend to borrow the most relative to the cost of the home. My team has seen this anecdotally in the shift in what our first-time homebuyer clients are considering in their searches.
Preference shifts may play a part. The pandemic may have increased the desirability of working from home and having enough space, but as many homebuyers seek a return to “normalcy,” or at least a feeling of one, they want connection to their community, good transit and walkability that is often found around attached homes and condominium properties where density supports these community features.
Finally, demographic shifts may play a part as well. In 2023, our team helped a number of clients who were downsizing from a larger home to a townhome or condominium. As the wealthiest section of Canada’s population ages, they seek manageable spaces for themselves, which often equates to smaller.
Why does it matter?
If you’re a homebuyer considering an attached home or condominium, you can feel confident that it will be re-sellable if you decide to move in the future. The fundamentals, particularly layout and location, are still the most important, but your home won’t be overlooked if you’re considering attached over a detached home.
If you’re selling a detached home this year, preparation and marketing are more important than ever. 2024 projects to be a busier, balanced market than 2023, but still slower than longer-term trends, meaning that homebuyers will have more leverage to find homes that suit them perfectly and are move-in ready. Put in the work to make yours stand out. I’d recommend starting with contacting us for some tips and an evaluation.
If you’re an investor, speed of sale matters. When considering a property to purchase as an investment, consider time on market as one of the carrying costs that you’ll have.
As we roll into 2024, the trend towards smaller properties is clear and will continue. However, every neighbourhood is different, and yours may buck the trend if it’s a more mature or desirable area of the city.
Do you have thoughts on this trend? Let me know in the comments or an email. See you next month with another trend report.
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