durhamregion.com | This Week | Thursday, June 16, 2022 | | 16 Home prices are dropping from February peaks across the region, but rising interest rates and inflation mean that it isn't more affordable to purchase a home. Durham realtor Lindsay Smith of Keller Williams Energy has been working in real estate for 39 years and he notes the average home prices in the region have "dropped dramatically" since the peak in February, when the average home price hit $1.2 million. In May, that number sat at $995,000, which is on par with prices in the fall. That figure includes detached homes, condos and townhouses, and in Oshawa -- Durham's most affordable community -- average detached home prices slid below $1 million too at $922,000. "What we had was a spike in January, February into March and then we started to see a turnaround and it's been declining ever since," said Smith, adding sales volumes are down too. "I don't think the slide has stopped yet; I think we've got another month." Buyers who were used to seeing most homes selling over asking are seeing a reversal. "There's an expression that's coming true, it's called 'blood on the street' and there's a lot agents that can smell blood on the street and what I mean by that is they can sense there's a shift in the market and they're trying to really aggressively take advantage of that," said Smith. "So, I've seen in my listings some really low offers come in that have no bearing on reality. It's just buyers and agents are fishing for people who are in trouble." Still, Smith said it's still a strong sellers' market, so typically most buyers can't get quite the bargains they may be hoping for. Sellers, meanwhile, may have to manage expectations. If a seller is moving within the market, they end up even as they're probably buying for a lower price, but the people it's hurting the most are retirees getting out of the market, said Smith. Interest rate increases are a major factor. They went up .5 per cent in June and more hikes are expected. During the majority of his career, Smith said it was typical for buyers to look at homes and then make an offer slightly below asking. Only in recent times have bidding wars been a market staple and he expects a shift away from that. Overall, Smith said there's still value in the Durham market for people moving from Toronto and the western GTA suburbs so he doesn't expect the market to dry up. "The prices have retracted but really they're still super high; the only thing that's really going to help this is more inventory." Karolina Krystyniak, an assistant professor of finance at Ontario Tech University, and said the recent price drops haven't made a significant dent in affordability. "It's hard for people to buy and it's hard for people to rent and obviously it's a huge equity issue," she said. Krystyniak said she bought a house last year and there was a lot of turmoil. "It's terrible. I feel like the whole process of buying a house these days, in terms of lack of transparency, in terms of auctions, and a lot of techniques that basically drive the prices up, and I feel like there's so much that could be done from a regulatory point of view that hasn't been done." Krystyniak said inflation and the global economy have resulted in increasing interest rates, which has slowed the market but that doesn't change the fact that affordability needs to be addressed. "It basically makes poor people poorer because so much of the cost of living is housing and now with increasing inflation -- three basic things which we need to survive, which is housing, food and gas are getting more and more expensive." Smith said he believes Premier Doug Ford's housing affordability task force has listed actions that can address affordability, including increasing housing supply. "Everything we need to stop the crisis is in that report but they've done nothing to date on that report." DO DROPPING HOUSING PRICES SIGNAL THE END OF BIDDING WARS? REKA SZEKELY rszekely@ durhamregion.com NEWS Homes for sale on Simcoe Street in Oshawa. Jason Liebregts/Metroland Two of the top three $2- million grand prizes in the Princess Margaret Cottage Lottery have gone to Durham Region residents. Michael McCrae of Greenbank won the $2.1-million Kawartha grand prize, which includes a $2-million lakefront cottage on Buckhorn Lake, plus $100,000 cash. As well, Oshawa's Elizabeth Tucker won the $2.2- million Haliburton grand prize of a $2.1-million lakefront cottage on Horseshoe Lake in the Haliburton Highlands, plus $100,000 cash. The third grand prize, a $2-million cottage on Fox Lake in Muskoka plus $100,000, was won by Denzil Faire from Mississauga. The draw was held on June 7. The Kawartha cottage features 3,003 square feet of finished open concept living space with four bedrooms, three bathrooms and a walkout basement. The total grand prize value is $2,114,916. The Haliburton cottage features 3,115 square-feet of finished open concept living space with four bedrooms, two-and-a-half bathrooms, a walkout basement and screened-in sunroom off the sundeck. The total grand prize value is $2,214,916. For more information, visit www.princessmargaretlotto.com. PAIR OF $2M COTTAGES WON BY DURHAM REGION RESIDENTS Two of the top three $2-million grand prizes in the Princess Margaret Cottage Lottery have gone to Durham Region residents. Princess Margaret Cottage Lottery photo