The Windsor housing market has been an impressive specimen to watch throughout the coronavirus pandemic.
For years, Windsor real estate had been in a rough patch, with a stagnating economy, high unemployment and many young people abandoning the border town for the glitz and glamour of Toronto.
However, since the early days of the COVID-19 public health crisis, when a substantial number of families and young professionals ditched life in major urban centres in favour of small towns and rural communities, the Windsor housing market has been booming without any signs of slowing down.
But with interest rates expected to rise over the next 12 months, and some market analysts warning about an abrupt end to the meteoric growth, could the Windsor housing market change its current trajectory?
Considering the hot start to 2022, conditions are still skewed in favour of sellers. In other words, Windsor is still a boomtown on the housing front.
Windsor Housing Market Continues to Soar in 2022
According to the Windsor-Essex County Association of REALTORS®, residential property sales advanced at an annualized rate of 7.1 per cent in January, totalling 466 units to kick off 2022. This represents a new sales record for the Windsor real estate market.
On a historical basis, home sales were 17 per cent above the five-year average and nearly 25 per cent above the decade-long average for the month of January.
Price growth has been quite impressive, too.
In January, the MLS® Home Price Index (HPI) composite benchmark price increased by 29.9 per cent year-over-year, to $517,100. When measuring average prices of homes sold in the Windsor housing market in January, they surged 25.2 per cent year-over-year to an all-time high of $614,482.
Here is the benchmark price for the three primary property types, and its growth compared to the same time a year ago:
- Single-Family: +31.4% to $547,700
- Townhome / Row: +35.4% to $417,300
- Apartment: +21.8% to $343,500
“Crossing over from 2021 to 2022 had no effect on the momentum of sales activity, which remained historically strong in January as sales reached the highest level on record for this month,” said Elica Berry, President of the Windsor-Essex County Association of REALTORS®, in a news release. “On the supply side, the story remains the same – new listings are barely holding at average levels, and overall inventories are down to their lowest point ever. With such tight market conditions, it’s no surprise that we’re seeing benchmark price gains of around 30 per cent year-over-year.”
Windsor has experienced a significantly tight conditions throughout the pandemic boom, which continued in January.
The number of new listings rose 14.3 per cent, with 591 units. Active residential listings plummeted 25.7 per cent, totalling 333 units.
Historically, new listings were 7.3 per cent above the five-year average, and active listings were more than 48 per cent below the five-year average.
Months of inventory, which measures the number of months it would take to exhaust present supply at the current rate of sales activity, was 0.7 at the end of January. This is well below the long-run average of 3.5 months for this time of year.
In the face of rising demand, new housing construction has not kept pace. According to Canada Mortgage and Housing Corporation (CMHC), December saw 104 housing starts in the region, down from 113 at the same time in the previous year.
Overall, in 2021, housing starts in the Windsor housing market reached 1,458, down from 1,555 units in 2020.
Are More People Being Priced Out?
First-time homebuyers and families have been increasingly finding themselves priced out of the broader Canadian real estate market. From coast to coast, rising prices are sidelining Canadians, who are unable to achieve the dream of home ownership.
Windsor is no different.
The Windsor economy is not indicative of current housing conditions. For example, the unemployment rate rose 1.2 per cent in January, to 8.2 per cent, which is slightly below the peak of 8.6 per cent reached in May. How are sky-high prices supported, given the high unemployment rate?
Like other places in the Canadian real estate market, Windsor prices were driven up by out-of-town homebuyers who, with their urban-earned equity, pushed up local housing prices. Historically low-interest rates also allowed many to enter the market close to the start of the meteoric ascent.
But local officials could begin to rein in this red-hot price growth.
In January, Windsor Mayor Drew Dilkens participated in the Ontario mayors summit and received $1.7 million from a $45 million provincial fund.
“It will allow us to undertake a Lean Six Sigma review to make sure that from a process and efficiency standpoint, we are doing everything we can to move development applications through the process as quickly as possible,” Dilkens revealed.
Whether this can limit the tremendous price gains or not remains to be seen. But it should be compelling to see if Windsor can sustain this sizzling start to 2022 throughout the rest of the year.