Dampened demand
Grey skies and another interest rate hike sent a chill through local homebuyers in July. Where do we go from here?
THE RAIN IN July appears to have dampened real estate enthusiasm. Volume for the month was quite low at 618 transactions, and the average price fell to $657,000, or about 3 per cent in just one month.
Should we expect this malaise to continue? Have interest rates peaked? Will interest rates come back down this year? Important questions that will affect our future.
In regard to interest rates, remember its only two weeks ago that they went up. The Bank of Canada doesn’t change direction with much urgency unless a calamity is unfolding. Unemployment rates are still at all-time lows, fueling wage increases that are inflationary. Inflation has slowed but not stopped. Food supply issues are now more severe due to the Russian attacks on Ukraine’s ability to ship grain. Real estate prices, and especially rental rates, have shown remarkable resiliency even in this period of sustained interest rate shocks. For all these reasons, we should not expect the Bank of Canada to reverse course in the near term.
“Locally, our housing supply shortage may have a greater impact than interest rates on the regional real estate market”
Locally, our housing supply shortage may have a greater impact than interest rates on the regional real estate market. In south London alone, imagine the impact we will see of four key drivers: the Maple Leaf Foods poultry plant; the Amazon fulfillment centre; the VW battery plant; and the LHSC/St. Joseph’s expansion.
The new Maple Leaf Foods facility just south of the 401 is ramping up production and staffing. Amazon’s new location in Talbotville will eventually become a job hub. VW’s plant near St. Thomas will likely bring 3,000 construction jobs to the region and thousands more jobs once operational. And our regional medical centres at Commissioners and Wellington roads are constant job creators, as the population grows and our needs expand.
All these new jobs in the region will require affordable housing solutions. The south end of London is primed to take advantage. Our team alone has done over 75 transactions below $500,000 in this area in the last 18 months. An average three-bedroom White Oak townhome rents for about $2,400 per month, which equals the average mortgage payment for a purchase of that same property. This is what affordable looks like in today’s market.
For the most part builders have slowed their new builds to a halt in the last year. It will likely take another year for the volume to return, and still two years for those houses to come to market. This potential supply squeeze suggests our relatively stable prices, which are about where they were a year ago, won’t fall much further.
We live in a stable market that is primed for growth. Expect cranes to dot the skyline along the Wellington-BRT corridor in the coming years… it can’t come soon enough.
Market analysis provided by Marcus Plowright, Sales Representative, A Team London. Marcus can be reached at 519-872-8326 or [email protected].
High- and low-priced real estate listings around town this week
London East
Low
Address: 59-2189 Dundas Street East
MLS number: 40456021
List price: $169,900
Days on market: 14
Size: 1 bedroom, 1 bathroom, 510 square feet
Listing agent: Karen Greason, Broker, Re/Max Centre City Realty Inc.
High
Address: 151 Travelled Road
MLS number: 40384231
List price: $2,190,000
Days on market: 148
Size: 6 bedrooms, 5 bathrooms, 4,120 square feet
Listing agent: Geoff Mitchell, Sales Representative, Re/Max Centre City Realty Inc.
London North
Low
Address: 1105-389 Dundas Street
MLS number: 40458502
List price: $314,900
Days on market: 6
Size: 1 bedroom, 1 bathroom, 779 square feet
Listing agent: Jose Nunes, Sales Representative, Sutton Group – Select Realty Inc.
High
Address: 40 Sir Robert Place
MLS number: 40459965
List price: $3,580,000
Days on market: 6
Size: 5 bedrooms, 4 bathrooms, 7,650 square feet
Listing agent: Kim Mullen, Broker, Sutton Group – Select Realty Inc.
London South & West
Low
Address: 209-45 Pond Mills Road
MLS number: 40446019
List price: $260,000
Days on market: 26
Size: 1 bedroom, 1 bathroom, 790 square feet
Listing agent: Ann Smith, Broker, EXP Realty
High
Address: 75 Woods Edge Close
MLS number: 40445791
List price: $2,989,000
Days on market: 34
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.