The city’s real estate market has seen a historic drop, but with interest rates stabilizing, the cyclical bottom may be near
INTEREST RATES CONTINUED their climb in January with the central bank pushing rates up once again. They’ve thoroughly tamed the real estate market, but job growth continues to defy the odds makers, tightening the labour market, pushing inflationary wages up.
January real estate sales were historically low, with only 343 homes changing hands in our market. This low volume was completed at a much lower average price ― $579,00 versus $614,00 just one month ago. That almost six per cent drop in one month is significant, although tempered by the low volume of sales. It seems in January sellers finally realized that the market had fallen further than they were previously prepared to accept.
The Bank of Canada has suggested our current interest rates will remain at or near current levels for the balance of 2023, thus creating a stable borrowing environment. Prices have fallen to levels from two years ago but remain considerably higher than pre pandemic levels ($445,00 in March 2020 versus $579,000 today).
In terms of affordability, the market has improved. At today’s reduced prices and current borrowing rates, it is now more affordable to purchase a home than it was at the peak one year ago, even though rates then were at historic lows. This helps to suggest the market may be more normalized and prices may have stabilized. It will be telling to see what happens with pricing in February and March. If we see the market turn, with prices climbing even slightly, we may see a return of buyers wanting to catch the bottom.
Steps to a better city
This week, the City of London announced its goal to build 47,000 homes by 2031. That is about 30 per cent more than previously planned and will take enormous changes in capacity by the municipal planning department and the industry at large. The greatest challenge may be the hole we dig in the next two years due to scaled back development in this period of demand decline. The current lack of buyers in the market, especially for new homes, will pass ― the question is just how long it will take for transactions to heat up once again, and then for homebuilders to ramp up.
The other major announcement in the past few weeks was the Health and Homelessness Summit wrapping up their work and finalizing a new system. As the real estate market turns in the coming year, so will the opportunities to bring an end to the suffering on our streets. The 60-plus organizations that took part in the Summit should be very proud of the model they’re building for other communities to emulate. Londoners can do their part by visiting www.fundforchange.ca and becoming part of this historic solution.
High- and low-priced real estate listings around town this week
Address: 305-1172 Hamilton Road
MLS number: 40366495
List price: $184,999
Days on market: 28
Size: 1 bedroom, 1 bathroom, 642 square feet
Listing agent: Gord Vandevooren, Sales Representative, Century 21 First Canadian Corp.
Address: 1839 Parkhurst Avenue
MLS number: 40336618
List price: $1,899,000
Days on market: 116
Size: 4 bedrooms, 3 bathrooms, 4,259 square feet
Listing agent: Richard Emil Salhani, Sales Representative, Century 21 First Canadian Corp.
Address: 54-1220 Royal York Road
MLS number: 40365229
List price: $364,900
Days on market: 28
Size: 2 bedroom, 1 bathroom, 1,150 square feet
Listing agent: Jordan Smeltzer, Sales Representative, Oak And Key Real Estate Brokerage Inc.
Address: 565 Leyton Crescent
MLS number: 40328768
List price: $3,280,000
Days on market: 130
Size: 6 bedrooms, 5 bathrooms, 5,966 square feet
Listing agent: John H. Crosby, Sales Representative, Royal Lepage Triland Realty
London South & West
Address: 32-198 Springbank Drive
MLS number: 40325975
List price: $135,900
Days on market: 138
Size: 2 bedroom, 1 bathroom, 640 square feet
Listing agent: Zahra Khawari, Sales Representative, PC275 Realty Inc.
Address: 75 Woods Edge Close
MLS number: 40351626
List price: $3,375,000
Days on market: 15
Size: 5 bedrooms, 7 bathrooms, 8,308 square feet
Listing agent: Owen Price, Sales Representative, Keller William Lifestyle Realty
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.