Interest rates drive Sarnia-Lambton real estate market lower in 2023

Sarnia-area real estate sales dropped to their lowest level in at least a decade in 2023, the Sarnia-Lambton Association of Realtors says.

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Sarnia-area real estate sales dropped to their lowest level in at least a decade in 2023, the Sarnia-Lambton Association of Realtors says.

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There were 1,412 sales during the year, down 6.8 per cent from the year before, with a total value of $759.3 million, down 8.1 per cent from 2022, the group said.

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The 71 sales in December totalled just over $40 million, 3.4 per cent lower than the same month in 2022.

The normal “December slowdown” in the market was “a little . . . exacerbated just because of the type of market we were in,” said new association president Jeremy Guerette.

Year-end numbers “came in pretty much the way I expected,” he said. “It was a little slower in the sales, which I think just kind of capped off the year we had.”

“I think interest rates are the main reason,” Guerette said. “I think that’s pretty much what’s driving uncertainty in the market.”

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The Bank of Canada, which had been increasing interest rates to battle inflation, held its benchmark lending rate steady at five per cent in December — its third straight hold after a series of increases beginning in early 2022, when the rate sat at 0.25 per cent.

A “drastic change in tone from the Bank of Canada” in 2022 as it “honed in” on inflation “kind of made everybody nervous,” Guerette said.

Because of that, “some people (are) on the sidelines,” unsure about where mortgage rates are going, he said.

Looking ahead, the central bank’s tone appears to be changing and “solidifying on either stable rates or maybe even a little down in 2024,” Guerette said. “That should be helpful, provided nothing suddenly changes.”

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If the market stabilizes, “which I feel like it might, then we’ll see a lot more buyers maybe feel a little bit better about getting back in the market,” he said.

Guerette, who’s been a realtor in Sarnia for 22 years, took over from Rob Longo as association president Jan. 1.

“I’ll try to fill Rob’s shoes,” he said. “He did a good job.”

While the local market has slowed and the number of properties for sale has been growing, the median home price remained steady through 2023, he said.

The year-to-date median price in December was $485,700, off one per cent from December 2022.

“We had a little bit of a roller-coaster ride from 2020 and 2019, all the way to 2022, but then things seemed to have steadied out” through last year, Guerette said. “I feel like that was a good sign.”

Homes were on the market for a median 35 days at the end of 2023 and the number of listings represented nearly five months of inventory, the association said.

Overall, homes sold locally in December for just over 96 per cent of asking price.

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