Your Third Quarter Market Update for London, St. Thomas
and Area.
Our Trading Area:
The year has been outstanding for those of you who purchased
their new home last year and earlier this year. The average home selling price is now up
$18,006, an average of 6.5% over the last 12 months. The average selling price of a home in our
trading area, as of September 30, 2016, now sits at $297,231.
What is driving this increase? The number of homes sold
across our trading area has increased over the same period in 2015 by 5.9%,
pushing prices up because of poor supply.
Inventories have decreased in this same period, over what was available
last year, by 8.4%. 5,262 Buyers since January 1, 2016 have had 977 fewer homes
to choose from.
What can we expect? We can look at trends. Let’s look at only
the month of September by itself…. The number of homes offered for sale had
decreased again by 5.2% across our trading area…The number of homes sold in
September rose by 8.4% placing more pressure on upward pricing. Unless a significant number of homes come to
market changing this balance this trend will continue into next year.
The qualifications have changed for those putting less than 25%
down on a mortgage. This will reduce the number of qualified Buyers. This may
slow the market. CMHC now requires qualification at 5% interest for 5 years to
buy a home.
On the other side, there are Buyers coming from Greater
Toronto to our market. They can live
mortgage free, and in many cases, have a large cash balance in the bank (remember
your home equity is tax free). They can continue to bid up prices in a tight
inventory market. Our belief is that
this tight inventory and strong sales environment will continue into 2017. Just matching 2016 Sales would be a healthy market.
North London:
Anyone who knows me is aware, I have predicted that the
average price of a home in North London would rise by 10% by the end of
2016. As of September 30, 2016, based on
the last 12 months, the average home is now worth $374,839 which is 9.4% above
last September’s average. This means the
average homeowner has enjoyed an increase in value of $32,335. The number of
homes sold across London North, for the first nine months of 2016, has
increased by 11.7% over the year before.
The inventory of home offered for sale in the first 9 months dropped
5.5% versus the same period a year ago.
The average home price in this area is still rising. ($404,735 versus
$348,541 for the month of September 2015). The number of homes coming to market
for sale for this September is down 11.1% over September 2015. Sales for the month were off marginally by
1.6%. With inventories, still below 2015…Prices will continue to rise.
London South:
As of September 30, 2016, based again on the average increase
over 12 months, our selling prices rose 8.5%. The average sale price now sits
at $321,756. This represents an annual increase in value of $25,838 for
homeowners in the South. The number of
homes offered for sale dropped during the first 9 months of 2016 by 8.5%,
further limiting the choices available for buyers. Sales rose, as well versus this same period a
year ago, by 2.4%. In my opinion, the rise in prices of homes will continue
driven by limited supply. As an example, the number of homes being listed for
sale in September dropped 6% while sales for the month rose a whopping 16.2%
London East:
Once again looking at the average increase in the cost of a
home over the last 12 months, prices rose 5.2% or $11, 170. The average sale
price now sits at $225,714 across the East of London. The number of homes sold
for the first 9 months of 2016 increased as well, rising 3.6%. During this same
period the number of homes being offered for sale dropped significantly by
7.8%. The number of homes being listed for sale is continuing to drop. In the month of September home coming to
market dropped again by 3.1% while sales increased by 8.4%. Prices should
continue to rise, as the reduced number of homes available continues to put
pressure on upward prices. It continues to be the most affordable area in the
city.
St. Thomas:
Prices in St Thomas
have risen 5.6% or $11,739 on an average house selling price of $221,103. This
is based on 12 months of sales history. The overall London St Thomas
Real Estate board is reflecting a 6.4% market increase over the same period.
This number is $17,905 with a new average price of $297,231. Probably a better
reflection of the area and rural sales mix. Homes offered for sale are
continuing below last year with the number of homes sold sitting 5.4% above
last year. The tight supply of homes offered for sale is continuing for
the overall trading area. St Thomas inventory jumped during September from 50
homes listed in September 2015 to 75 Homes listed in September 2106. Sales for
the month jump as well from 50 last September to 70 this September.
Summary:
CMHC (Central
Mortgage and House Corporation) insures all Bank Mortgages with down payments
less than 25%. The changes in higher income qualifications initiated by CMHC, we
believe the number of homes offered for sale will remain in line with this year.
This projection is based on supply and demand repeating at the same levels as
occurring in this calendar year. If demand increases over 2016 and the number
of homes available does not change, prices will take off.
Basically, there is
no better time to buy your first home. There is no better time to Sell your
existing home and make that move to a larger home. At the same time, there is no worse time to
liquidate or move down, as prices will continue to rise.
New for First time Home Buyers, Finance Minister Charles
Sousa said first time homebuyers won’t pay any land transfer tax on the first
$368,000 of a purchase price after January 1, 2017. Call us today if you or
someone you know can benefit from our help.
Gib & Mary Heggtveit
519-421-2626