With rising interest rates bringing declines to the housing market, the real estate sector hunkers down for a frigid winter
AT THE START of the pandemic, the average price for a home in the London region was about $445,000. This past month, after a slight decline from October of about 1.5 per cent, the average price was $607,000. From the price peak in February this year, the average price has declined $214,000, or about 26 per cent.
Dramatically low interest rates designed to stave off a pandemic recession fueled a housing boom ― and the only thing we now know in hindsight is the rates weren’t raised soon enough.
Sales activity continues to be very slow, with a decline of about 44 per cent compared to a year ago. The attitude of sellers towards value continues to lag the market reality. Achieved sale prices are 4.4 per cent below list prices, and the average days a home is on the market continues to climb.
“The number of real estate agents active in our market is approaching 2,300…only a select few will make a reasonable living this winter”
With mortgage rates at current levels, even with a $214,000 average price decline, housing is less affordable today than it was at the peak in February. The adjusted bank rate will be announced today, and with an expected seventh straight rate hike, affordability will be reduced even further. Add to that the fact that Christmas is 18 days away ― a time of year that is historically sluggish for real estate sales ― and we have the makings of an extremely slow winter season.
The number of real estate agents active in our market is approaching 2,300! If the averages hold, the number of transactions in the month of December will likely be around 300. That translates into one transaction for every eight agents, and with the 80/20 rule, only a select few agents will make a reasonable living this winter.
Professional in the real estate sector are, of course, in this through thick and thin, but the dramatically reduced number of transactions will affect agents, lawyers, home inspectors, movers, insurance providers, home stagers and other service providers in this category.
The good news is real estate pricing is relatively stable at a price point 35 per cent higher than at the start of the pandemic. The glass is half full, even if the contents taste like cold medicine!
Market analysis provided by Marcus Plowright, Sales Representative, A Team London. Marcus can be reached at 519-872-8326 or marcus@ateamlondon.ca.
London East
Low
Address: 201-1176 Hamilton Road
MLS number: 40325887
List price: $209,900
Days on market: 8
Size: 2 bedroom, 1 bathroom, 642 square feet
Listing agent: Scott Vannoord, Sales Representative, Sutton Group – Select Realty Inc.
High
MLS number: 40327717
List price: $3,325,000
Days on market: 74
Size: 3 bedrooms, 4 bathrooms, 4,700 square feet
Listing agent: James Hudson Smith, Sales Representative, Sutton Group-Select Realty Inc. Brokerage
London North
Low
MLS number: 40326441
List price: $374,900
Days on market: 81
Size: 2 bedroom, 1 bathroom, 1,150 square feet
Listing agent: Jordan Smeltzer, Sales Representative, Davenport Realty Brokerage
High
MLS number: 40328768
List price: $3,280,000
Days on market: 67
Size: 6 bedrooms, 5 bathrooms, 5,966 square feet
Listing agent: John H. Crosby, Sales Representative, Royal Lepage Triland Realty
London South & West
Low
MLS number: 40325975
List price: $135,900
Days on market: 75
Size: 2 bedroom, 1 bathroom, 640 square feet
Listing agent: Zahra Khawari, Sales Representative, PC275 Realty Inc.
High
MLS number: 40320993
List price: $2,999,900
Days on market: 85
Size: 5 bedrooms, 6 bathrooms, 7,475 square feet
Listing agent: Heather Gunn, Broker, RE/MAX Hallmark A Team
Disclaimer: London Inc. does not guarantee the accuracy of the statistical data on this page. The data does not represent the listings of any one agent or agency but represents the activity of the real estate community in the area. Any real estate agent’s ad appearing is separate from the statistical data provided, which is in no way a part of their advertisement.
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