Your City of London Home Sales Report for July 2022
Sunday Aug 21st, 2022
We are now in one of the strangest housing markets ever experienced. Still experiencing the effects of Covid and coming off one of the highest spending years in Consumer history in 2021 we are now facing record inflation. Supply lines to the end user are still recovering their momentum and the Bank of Canada is pushing to 3.5% lending rates to the Big Banks and about to increase again.
Americans are not affected the same as Canadians as they have 30-year locked in mortgages. We only have 5-year lock ins and are therefore impacted much more.
Ukraine has the second largest reserve of gas and oil compared to Russia. Thus, the war in Ukraine. Russia already took Croatia with supplies 50% of the Neon Gas used in the world’s semiconductor production. We therefore have rising gas and oil prices which also drives inflation. Inflation runs 6 months behind an economy’s performance. That is why there is a fear of recession worldwide next year.
What does this mean for the future of the housing market across our region? Back in 2017 the Government introduced the ability of immigrants to work in Canada while attending programs in our trade schools and universities and the ability to seek full time employment in Canada and stay upon graduation. In 2021 the USA which is 10 times our size had 600,000 immigrants. We had 500,000.
The Ford Government announced they are going encourage building of new homes over the next 10 years. That does not solve today shortages in available new homes and rental accommodation. Rental accommodation across Ontario is up over 16% versus a year ago. Rental accommodation is virtually impossible to find. Where all these new immigrants and growing family going to live?
Right now, people are hanging on to what they have, due to fear in the uncertain market. Unemployment is predicted to rise next year. Once the smoke clears housing prices will start to rise again to fill the real need.
What Should Buyers and Sellers Do?
In other words, my message to first time home buyers is BUY NOW! There are no bidding wars, and the average selling price has moved below 100% of asking with the appropriate conditions to protect you the Buyer. If you wait, prices will go up and offers will be harder to get any breaks on.
Move-up Buyers should sell first with an “Experienced Realtor” who will analyze the selling environment and maybe not get what you thought you’d get, but then you will be able to go alone into a purchase situation, without bidding wars, and negotiate the purchase price and conditions for what you need.
This is not the time to liquidate. Prices across oxford County are still above July 2021.
The Market Activity:
The average price of a Home in the city of London fell to $659,976. This was the second time this year that the average price fell below $741,557. In month of June, we averaged $690,753. The average price in July last year in a bidding war environment was $622,128.
It is also important to understand what is selling across the City in July 2022 by selling price.
The highest number of sales run in the price range across the City between $400,000 and $700,000. Most of my Clients’ home would sell around $1,000,000 or above. Obviously, we are living with a much slower category with fear of rising interest rates. There were 25 sales in July between 2,000 sq. ft. and 3,000 sq. ft. 4 Homes were under 2,000 sq. ft. The average came in at 2,304 sq. ft. built in 2004 with a list price of $1,281,103 selling for 97.4% of asking price at $1,223,322, The average for the market was 98.6% of asking prices
Sales have slowed dramatically to the slowest in history for the time. Demand is pent up, but people are fearfully waiting to see what the future holds. In July last year 677 homes sold. In July 2022 we saw Buyers only purchase only 390 homes across the City. Even January 2022, historically the slowest month of the year, had more sales at 400 homes
The movement has erratic this year with June not being the historically biggest home sales month in the last two years, as in the past. The slowdown started in April this year with the first of the interest rate raises and has declined month by month with each interest rate increase.
It had now jumped to 20 days to sell the average home. This is a significant slowdown from even the previous 3 slower months, April 10 days, May 11 days, and June 16 days. This slowdown in market activity moved the city of London into a false balanced market, with limited sales and supply. Negotiations are now common without bidding wars occurring. The average home is now selling at 97.8% of asking price. This will not last forever and even in June, price wars were occurring but to a lesser degree.
The chart below will help you understand where the negotiations are taking place. The $400,000 to $600,000 price range is the most competitive.