June 2017 Real Estate Numbers: Settling in at the New Normal
It looks like the recent run up in London Ontario housing prices is coming to an end. Although it would have been better had we kept pace while Toronto, Hamilton and Kitchener-Waterloo saw a steady rise in prices over the last few years, London did finally play catch up during the first six months of 2017. The average for a detached home rose from approximately $315,000 at the end of 2016 to $341,533 in January, $352,184 in February, $392,069 in March, and $397,070 in April. And then in May we had the first signs that things were settling out when the average detached home price was almost the same as April at $397,820. The average list prices during that time were in all in the 370’s. The average list to sales ratio ranged between 103-107% during this period.
While list prices have remained consistent in the 370’s, the average sale price in June (as of this writing there is still about 5 hours till the close of business–Canada 150 is tomorrow so I am writing early–so these June numbers are provisional, but close enough to final to be meaningful) has retreated from the highs of the last three months. June has seen an average sale price of $387,900 for a detached home. Even though this is a few thousand below recent highs, it is still 104% of asking price.
This puts numbers to what we as realtors have been experiencing on the ground anecdotally. We have been seeing more homes getting listed and a number of listings have seen their offer hold back dates come and go with no offers. A bit of a pull back from peak numbers was expected as we crested the wave, but it looks like we will be settling into a new average price for a detached home somewhere in the 385,000-395,000 range. In fact, the average for the year is $384,740. And even though things are quieting down, with the list to sale price ratio still at 104% of asking, we are waiting for realtors and sellers to start trusting the new price levels and listing their homes at sale prices that reflect their market value. We as realtors and sellers alike have gotten a little addicted to the game of listing below market value and having demand drive sale prices above the asking price. As the number of listings increases and the demand starts to normalize again, that tactic will not work as consistently. List prices will start to better reflect market values again. This is stability and predictability will be good for the market.
Condo prices again remain solid and the list to sale price is still 104% of asking. But because the number of condo sales overall is a fraction of the detached home sales, condo numbers can be a bit up and down depending on the mix of properties for sale during the last month. Sales of condos remain strong even though both the asking and selling prices are lower this month from last month. June’s average asking price was $207,905 (it was $234,955 in May) and the average sale price was $217,986 (it was 243,827 in May). We saw the same thing happen in March as well. My instincts are that condo prices will remain strong after the detached home market run up has exhausted itself, in large part because there are so few move in ready family homes for sale anymore under $300,000. I am expecting a significant number of buyers will look to condos rather than purchase a home that needs extensive renovations.
The overall average for the city of London, condos and detached homes taken together was $341, 376, a drop from the high of $353,411 in May. The overall number of units sold was also down from May’s high of 1016 units to a more typical 769 units. The overall list to sales ratio was still 104% of asking.