High interest rates slow Sarnia-area home sales in August: official

The Sarnia-area’s real estate market felt the impact of high interest rates in August, says the president of the Sarnia-Lambton Real Estate Board.

There were 116 real estate sales locally last month, the fewest in August for the last decade, according to the board’s monthly statistics.

A slowdown was typical during August before the pandemic, “but obviously for the last two or three years, nothing has been typical,” said board president Rob Longo. “We’re getting back now into that cycle.”

The Sarnia area experienced a seller’s market during much of the pandemic, with demand for homes outstripping supply and carrying on through normally slower periods.

But demand eased in August with more listings available in recent months, along with the impact of higher interest rates as the Bank of Canada has battled inflation.

Those high interest rates “are the only thing slowing the real market right now, otherwise we’d be going just the same as had been the last couple of years,” Longo said.

While higher rates appear to have “accomplished their goal” of easing inflation, “I think it’s having an overall larger negative effect,” he said.

“The interest rate is making it just a little bit too difficult for a lot of those buyers to jump into the market right now,” Longo said. “It has created a lot of hesitation.”

The number of listings in the Sarnia has been growing in recent months, he said. There were 418 active listings last month, up nearly 20 per cent from August 2022.

Listings are as high as they’ve been in about five years, Longo said.

There is “good inventory — good selection — out there, which is what the market has been demanding for the last couple of years,” he said.

And buyers sitting in the sidelines last month due to high borrowing costs haven’t gone anywhere, Longo said. “As soon as any weakness is shown in interest rates, then they’re all ready to bounce back in and the market will be just as busy as it ever was.”

The total dollar volume in Sarnia-area real estate sales was nearly $62.8 million in August, down more than nine per cent from the same month in 2022.

The local market had more than three months of real estate inventory available last month, also up from August 2022, the board said. Months of inventory reflect how long it would take to sell current inventory at current sales rates.

And there has been “a little softening of home prices, but overall not too much,” Longo said.

The year-to-date median price was $490,000 in August – down two per cent from the same point in 2022.

While there have been “huge impacts” on prices recently in some larger Canadian markets, that hasn’t been the case in the Sarnia area, Longo said.

“We haven’t lost a lot of ground pricewise,” and local homes are typically selling for just over 98 per cent of their asking price, he said.

That shows “strong funds” in the local real estate market, Longo said. “Some other areas were over-inflated.”

Longo said he’s looking forward to September results and anticipates a busier fall for real estate, particularly since the Bank of Canada recently announced it was holding interest rates steady.

“Any time they’ve been held, we’ve seen a little bit of a pickup in the market,” he said. “If there’s a little bit more confidence in the market, people step forward to purchase.”

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