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July 2023 Oakville real estate update - interest rate hike cools market

Bruce Christianson on Unsplash
Bruce Christianson on Unsplash

In July 2023, sales in Oakville saw a shift in the market after the Bank of Canada hiked its lending rate to 5%. Inventory remains at 2.3 months, unchanged, and all segments realized a price decline from the previous month. Sellers are waiting longer and accepting offers below list. For the moment, bidding wars have slowed.

"Home sales continued to be above last year's levels in July, which suggests that many households have adjusted to higher borrowing costs. With that being said, it does appear that the sales momentum that we experienced earlier in the spring has stalled somewhat since the Bank of Canada restarted its rate-tightening cycle in June," said Toronto Regional Real Estate Board (TRREB) President Paul Baron.

GTA Update

Across the GTA, owners sold 5,250 (or 380 more properties) in July 2023 than in 2022, a 7.8% increase. Over the same period, GTA property values increased by 4.2% to $1,118,374, up $45,161. This marks the first time since last year that home prices have risen.

Oakville Update

During the last month, sellers in Oakville listed 429 properties and sold 179. Available inventory declined to 2.3 months, remaining unchanged from June.

The average residential property sold for $1.33 million, down $238,000 from June; a sale took 29 days, an increase of just eight days since June.

Buyers, on average, were paying 98% of the listed price, down 3% from June.

Year-over-year home prices

A typical residential property in Oakville now costs $1.406 million, which has increased by 3.2% since July 2022 but is down from June 2023. An average detached home price is $1.853 million, up 5.99% and down $30,000 from the previous month. 

A semi-detached home is $1.119 million, up 7.07% from a year ago. A townhouse will run you 1.66% more at $889,100. A condominium apartment costs $686,500 - down 4.3% from last year and up from the previous month by $5,800. 

"The Bank of Canada's rate hike may have taken some of the enthusiasm from the market, as there was a small dip from May prices," says OMDREB President Hunter Obee.

July 2023 Oakville residential real estate statistics
Type Units Sold Median Price % LP to SP DOM
Detached 81 $1,885,000.00 99% 20
Semi-Detached 2 $1,131,000.00 103% 5
Link 1 $1,428,000.00 96% 5
Condo Apartment 30 $738,750.00 98% 37
Town House - Condo 26 $792,500.00 94% 16
Town House - Freehold 39 $1,171,000.00 99% 15

DOM - total days a property is for sale; % LP to SP - the percentage difference between the list price and the sold price.

The best 5-year fixed-rate insured mortgage is 5.09%, which increased by 0.35% from the June real estate update. However, a 3-year variable rate is available at 6.10%, increased by 0.35%.

Bank of Canada's Tiff Macklem increased the Bank of Canada rate as the Consumer Price Index (CPI) decreased to 2.8% or 0.6%. Since June's update, the Bank has increased its overnight lending rate twice by 0.25% and now sits at 5%.

However, the Bank of Canada considers three other CPI indicators: CPI-trim, CPI-median and CPI-common. These indicators are all above the target rate of 2%. For June, the trim was 3.7%, the median at 3.9%, and the common at 5.1%. 

The last time these three indicators were at 2% before the pandemic was in January 2020. 

"Uncertainty surrounding the direction of borrowing costs, jobs and the overall economy has impacted home sales over the last two months. Over the long term, the demand for ownership housing will remain strong on the back of record population growth. However, many homebuyers will continue to be on the sidelines in the short term until the direction of monetary policy and the economy becomes clearer," said TRREB Chief Market Analyst Jason Mercer.

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