Friday 14 July 2017

Your 6 Month Market Update for London, St. Thomas for 2017

London/St. Thomas and Surrounding Area:
It has been a year to remember…Sales of homes across our trading area are up 21% on the base of 3206 homes that sold last year. Prices rose 15.6% or $44,966 compared to the last 12 months (July 1 2016 to June 30, 2017) to an average of $336,622. Listings of homes for sale during this period only rose 4% or 187 more homes listed for sale.  The increase in the number of homes that sold in the same 6-month period was 675, almost 4 times the increase in the number of homes coming to market. 

Will things slow down? In the month of June this number was offset a bit with 1017 homes listed compared to 890 for June 2016 adding 127 homes to the number of available homes for sale. The potential effect was significantly minimalized by an increase in sales in June of 85 more homes than last year adding only 42 more homes for sale across our entire trading area.  The trend appears to be continuing upward with an average selling price for the month of June 2017 across Middlesex and Elgin hitting $367,647 compared to $308,141 for June 2016.  The pressure is still on…. Remember, June is traditionally the biggest selling month of the year...

City of London:
The Sale prices reflected in this section are Year-to-Date. All other sections are 12 month average prices and therefore include 6 months of prices from a lower 2016 market.
Here is a look at the City itself for the first 6 months of this year.  Rather than looking at the average price for the last 12 months we are now going to look at the average for the last 6 months only trying to get a better handle on recent activity. The average home in the city of London is now selling at $384,511 (6-month average). This represents an increase of 22.1% year to date or $69,633 for the average home.  To try and predict the future, we need to look at Supply and Demand. A ¼% increase in the lending rate this month and perhaps a further ¼% in October will not really affect Buyers, moving up, or buying their first home in our market.  The average price of a home in east London @ $252,066 or St Thomas @ $240,412 is still very affordable. Supply is another story, we finished this first 6 month with 705 homes actively offered for sale in London. Last year at the end of June we had 1013 homes for sale. This is a further reduction coming into July of 30% fewer homes to choose from across the City of London.  The average home owner got 105% of asking price during this six-month period.  It will continue...Think about it! A 3.5% fixed rate 5-year mortgage term offered around year end in 2017 will still be a great deal. The economy is still solid…Toronto buyers may now take longer to sell, but they still want to take advantage of our much lower prices….

London North:
This area remains the highest price area of the City of London. The average price of a home in this area now sits 19.9% at $433,365 for the last 12 months (July1, 2016 to June 30, 2017). In June 2017, 206 Residential Properties sold. Their average price was $476,405, clearly indicating that the upward trend is continuing. The number of homes sold in the North is up 10.4% above the first 6 months of 2016 Sales for the month of June were marginally lower than last year. But current year-to-date inventories are down 7.4% still creating upward pressure on listing.  Inventory in June we up marginally by 1.7%, not enough to impact this demand. Some potential move up buyers have given up their search because they don’t want to be homeless.  This remains a pent-up demand potential area of buyers and sellers…In our opinion this climb in prices is not over yet and a 1/4 % hike in interest this week won't change much...Don't forget that the economy is significantly strengthened.

London South:
This is the area of the city with the most sales of homes since January 1, 2017. Prices in this are up 16.4% based on the average of the last 12 months.  This means the average home in this area has increase by $51,385 and now sits at $369,613.  There were 208 sales of homes in the South in the month of June 2017 with an average selling price of $399,913. Once again, a reflection of a rising market.  Inventories in the south are a bit better delivering an increase of 10.6% since the 1st of January 2017. With more to choose from, this increase helped increase sales throughout the area. Sales are up 24.3% on a year-to-date basis.
As stated, this climb in prices is not over yet and a ¼ % hike in interest rated this week won’t change the enthusiasm much.

London East:
Based on affordability this area has enjoyed a 27.4% increase, this is the highest year-to-date increase in the number of homes sold in the City. The average price of a home in this area rose 12% over the last 12 months by $27,049 to $252,066.
Inventories rose 10% for the same period.  This means inventories are now significantly diminished based on the increase in the number home sold in the same period (27.4%). This climb in prices is not over yet and a ¼ % hike in interest rated this week won’t change much.

St. Thomas:
This is a market that should see significant price gains in the next few months.  Inventories are the tightest in the entire trading area. They did increase in number of available homes for sale by 10% over the last 6 months.  But to really put things in perspective we need to look at total sales versus total number of homes listed for sale since January.  All residential homes listed for sale = 563, all residential homes sold = 504. Virtually everything listed sold! The average price for the last 12 months rose 10.2% or $22,101 to $$240,412.   There were 107 homes sold in June, the average price of those homes was $272, 255. All of this indicates that St. Thomas will see an average year end price increase of around 20% for the Calendar year 2017.

Comments:
Inventories remain tight and demand continues to be strong.  2 projected increases in the lending rate of ¼ % will only bring mortgage rated to around 3% or slightly above. The Toronto market has cooled in volume and prices may adjust slowly downward… We are 300% lower than their average... If you have to drop the price on your resale home in Toronto to $1,000,000 from $1,100,000, our $384,511 City of London average price will still let you live here Mortgage free and have a bank balance that most of us would dream about…. They are still going to come until our prices get much closer to each other.   Prices will continue to rise and TO-DAY is the best day to move up or buy your first home.  Remember, there are several strategies for making a purchase in this market.  First the house must appraise to get a bank to finance.  If you bid $50,000 over asking, you must have the difference between the appraised value and the bid price. 

Moving up this is not a problem and Cash offers is the best strategy. The major concern is finding appropriate month to month accommodation until you find the right home. Sublets are your best option.

For 1st time buyers there is considerable risk if thinking of cash offers…Best advice is set reasonable goals for that first home…You can always move up when you build equity. Remember the average selling price is currently about 10% over asking based on recent sales and the area.

Sometimes a good approach is to try and submit a backup offer.  The number of offers failing is on the increase because buyers can’t come up with the difference between bank valuation and what the Buyer offered.

We are here to help with strategy to approach this market in a meaningful and productive way.

With Sellers, we are proud of our Listing Marketing Program and are well equipped to maximize exposure to get the “highest” and “best” selling price possible in the shortest time possible from this market.


Want to know what your home is worth?  Call us for a market update.