Windsor's hot housing market is continuing to see a slight correction according to June statistics, and it's happening more quickly than expected.
The average sale price on homes in the city has been trending downward since March. In June, the average home price dropped to about $607,700 — a difference of about $40,000 dollars from May. In March, average sale prices were more than $720,000.
But average prices are still much higher than they were a year ago, making it a challenge for first-time buyers.
"I'm hoping it keeps going down," said Elizabeth Ward, who rents a home near Walkerville.
"The average Windsorite household makes under $60,000. We make a little over that average, and that equals to a less than $300,000 house, so $600,000 is still way out of our price range."
Ward said she started looking to buy about four years ago. She's held off on the hunt for now, hoping the downward trend will continue.
"I'm excited to see it is but cautious to see if it stays," she said. She hopes less outside investment may mean more locals can buy into the market.
Maggie Chen, broker of record for LC Platinum, said rising interest rates are putting the brakes on a situation that was overheated.
"When that rate increase settles in, everybody the buyer and the seller, both parties will calm down a bit more. We have to be kind of objective," she said.
"From 2021 to 2022, the rise is too quick. I think now we are kind of normalizing the market, which is I think is good for both parties the buyers and the sellers, because we are getting into a more balanced market."
Interest rates are likely headed for another sharp increase later this month, with experts predicting a significant Bank of Canada hike of 0.75 per cent. That can be more bad news for people looking to get a mortgage or refinance an existing one.
The current interest rate of 1.5 per cent — following three straight increases from the Bank of Canada — has reduced the buying power for people entering the housing market. It's also increased the financial burden on existing homeowners paying off a mortgage.
Bryan Bedard is looking to sell his Windsor home and potentially buy somewhere else. But he worries that not getting as much on the sale may impact his buying power.
"The uncertainty is our biggest concern, with home values appearing to fall," he said.
"As someone who's trying to buy a place, not wanting to overpay, because we're also having to sell our place, and worried that we may not sell it for as much as we could've a few months ago, so what should that gap be?"
Windsor bound for major real estate decline in 2023; report
According to Desjardins Group's recent Canadian Residential Real Estate Outlook report, Chatham-Kent and Windsor-Essex are among the top three regions in Ontario expected to see the biggest decline in home prices as the market corrects itself.
"What our report says is that those markets that have seen the biggest appreciation in the last couple years are going to be the most vulnerable to the price declines," said Jimmy Jean, vice-president and chief economist with Desjardins, who oversaw the report, which was published in early June.
Ontario-wide, the report projects an average price decline of about 18 per cent. Windsor-Essex is expected to see a price decline of 44 per cent from its peak, according to Jean. But that comes after a 100 per cent appreciation from December 2019 until the recent peak in house prices. Chatham-Kent is predicted to experience a 47 per cent drop from its peak.
Growing interest rates are a significant factor in why, Jean said.