London:
Last year sales in the first quarter of 2018 were off about 30% while prices still rose. This year, the number of homes that sold were up over all, +25.4 % in January +3.2% in February and then leveled off to -3.2% for March. This delivered a 5% increase for the quarter. Inventories of homes offered for sale dropped from 4 months supply in January and February to 3 months supply in March. Remember a balanced market where we can negotiate is 6 months supply or more. This puts upward pressure on prices. The number of days that it takes to sell a home started the year in January at 27 days, then dropped to 19 days by the end of March.
The
average home across the City of London rose 6.4% or $24,228 over the average
for the full year of 2018. The 2018 average was $373,376 and after 3 months of
sales in 2019 the average home is selling for $397,604
Home
owners averaged 100.7% of asking price in January. This number increased to
over 102% for February and March respectively. It is being driven by First Time
Buyers and Low inventories. It is
important to look at the variance to the listing (asking) price by price
category, as it varies significantly.
If
purchasing or selling this is a good indicator of what you can expect in your
price range.
Negotiation
of price is occurring for categories of homes selling between $400, 000 and
$500,000 and homes from $600,000 and above.
We
predicted we would see a 5% to 8% increase for 2019. Obviously, we still believe this will
occur. With the Feds offering Down
Payment loans to first time Buyer buying up to $350,000, this may drive our
prediction even higher.
London North:
Sales
of homes in North London for the first 3 months of 2019 are up +3.5% over the
same period in 2018. Inventories are up dramatically +25.7% for the same
3-month period in 2018. The higher
number of homes offered in February and March. This is putting pressure on
months’ supply… It is still holding consistently at 4 months of homes available
for purchase. The number of days it
takes to sell the average home now sits at 21 days up from 18 days in February.
The
average price of a home in North London sits up 7.2% or $32,540 outpacing the
City as a whole. This puts the value of
an average home in this area at $486,879, up from $454,339 for the 12-month
period ending December 31, 2018.
It
is apparent that the popularity of this area of the city because of its
proximity to the best of services, schools and access to the University is
paying dividends for home owners.
London South:
Sales in South London in 2019 are up 11.5% over the
same 3-month period for last year. At the same time the number of homes
available for purchase rose 17.8% above last year’s lower inventories. This may have some effect on the number of
months’ supply of homes offered for sale.
Remember anything at 6 months’ supply or higher is considered a balanced
to buyer’s market where negotiations can be applied. In January and February,
we sat at an average of 4 months’ supply of homes offered for sale. In March this number dropped to only 3
months! This will increase competition
for homes in this area and price bidding in several categories. The average Selling price compared to Asking
price has been over every month so far in 2019. January was 101.2% of “Asking”
on average. This average increased to 102.9% in February and again to a
whopping average of 104.9% for March.
This has driven the number of days it takes to list a home in this area
from 21 days to 18 days. Look at the graph under the City of London, you can
see this has been driven by First Time Home Buyers pushing prices to an average
between 112% of asking to an average $105% for sales between $100,000 and
$350,000.
London East:
Last
year the east set records in price increases over 14%. This area also had higher sales than the
other areas of London. At the end of the
first quarter of 2019 the number of homes sold is virtual identical to the
number of homes sold last year for the same time period. 362 homes were sold in
the first 3 months last year. This year the number of homes sold to date is
360. The number of homes offered for
sale in this same period remained flat as well, identical to last year at 931
active listings. What this means is inventories are still critically low in
this area. In January and February there were 3 months of homes offered for
sale in each month. This has now dropped
to only 2 months’ supply. Remember you need 6 months supply of homes or more in
your specific price range to even consider trying to negotiate. You are just wasting your time if you try.
(refer to the chart in the City overview at the start of this analysis). In
January Home Sellers were getting an average of 100.9% of asking in this area.
In February this rose to 105.2% above asking on average and in March the
average dropped marginally to 104.7%. This indicated that virtually everything
in this area is in a bidding war. The year started with the average home
selling in 24 days and has since dropped to 16 days for February and 17 days
for March.
So,
what happened to the average price? The price of the average home sold in the
first 3 months of 2019 rose 4.9% or $14,031. The average price for the 12-month
period ending December 31, 2018 was $298.300. That average price at the end of
the first 3 months is now $303,331. With
the higher sales in January and February and flat inventory compared to the
same period last year and months’ supply in March dropping to 2 months supply
of homes offered, watch for a very aggressive second quarter in this area with
a lot of bidding wars.
St.Thomas:
An
interesting start to 2019 in this area. In January 2018 only 28 homes sold.
This year in January there were 44 sales.
Sales in February were off -25.9% and moving back up with sales down
marginally -6.7% in March. Overall the sales were flat for the first 3 down
only -1.9%. Inventories of home available for sale during this period increased
in January by +14.5% and then fell in February by -7.4% and came within 1
listing of a home lower than March 2018. As far as months supply this did not
change the upward pressure on prices in this area. Remember 6 months is considered a normal
market and above where negotiations take place.
Because of the consistently low inventories, the months’ supply of homes
offered in January and February remained at 3 months’ supply but dropped in
March to only 2 months’ supply. Remember
that sales and inventory increased in January as a result home owners received
an average of 99.6% of their asking price. This percentage increased to an
average of 100% for February and March respectively pushing prices further up..
St.
Thomas stole the show, pushing prices up 11.9% or $39,625 for the first quarter
above the average for the 12-month period ending December 31, 2018. The price
of the average home in St. Thomas now sits well above the $300,000 mark at
$334,362 up from $298,735 for the 12-month period ending on December 31,
2018. This area is still well below the
average price of a home across the City of London currently sitting at an average
of $397,604. We consider this market
excellent value as a bedroom community with all the services of London and provides
easy access to recreation, Lake Erie and Port Stanley.
Summary:
If
the Feds bring in the loan program for first time home buyers, it will add more
potential buyers to the mix. Bidding
wars will cause these buyers to walk away but will initially bring more offers
to each home priced below $350,000. The
reason they will have to walk away is the way Chartered Banks do the pre-approvals.
Example: A Buyer may have a pre-approval of $350,000 and is putting an offer on
a home offered for $329,900. Generally, the appraisal will come in around this
price. The bank will not lend money for
more than this appraisal. This means the
Buyer must come up with the additional down payment to cover their bid. Obviously, the government is not going to
provide the 5% down payment loan above the appraised value. This will cause a
lot of offers put in “Conditional on Financing” to fail based on the
appraisal. A Buyer should never put in a
“Cash Offer” (one without conditions) unless they can make the additional down
payment themselves. A qualified Buyer
may have a 20% down payment and they offer Cash, they may find themselves using
Canadian Mortgage and Housing Insurance because their purchase based on the
appraisal by the bank is now 10% below their bidding price. Remember, that a Buyer that has an accepted
offer without conditions, that fails to close is responsible for any out of
pocket expenses incurred by the Seller in order to resell the home.
In
closing, this is going to be another good year of price increases based on the
continued demand, more First Time Buyers, Home Owners cashing out their equity
in Metro Toronto, and everyone taking advantage of what are still considered
bargain prices in our area. Couple this with Months’ Supply running at 2 to 4
months, and the only way is up again… We believe now that we will be closer to
an over all gain of 8% or higher based on the 6.4% average achieved after 3
months. A great time to buy that first home, Invest or move up to the dream
home. This is not the time to cash out.
In this case wait for the eventual balanced market when it finally arrives, not
this year
Gib & Mary Heggtveit,
Broker & Sales Representative
Direct: 519-421-2626
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