CITY OF LONDON:
Well, what a year! This
was clearly a record setting year for my 15 years of Real Estate experience.
Our City experienced a value increase for the average home of 18.3% in one year.
The average home rose from $283,510 to $335,607. This new record sale price was
driven by an 11.6% increase in the number of homes sold versus 2016. What contributed
to these records? Based on statistics it appears that inventories dropped signicantly
in 2017 and Buyers from Metro Toronto started capitalizing on their equity
across central Ontario.
For statistical purposes
it is important to understand what a balanced market is. A balanced market has 6 months’ supply of
homes for sale. A Buyers’ market offers more than 6 months’ supply while an Sellers’
market offers less. inventory in January 2016 sat at 1168 homes (4 months’
supply) for sale and then dropped to 721 homes (2 months’ supply) for sale in
January 2017. This represented a 38.3% decrease in supply starting the year. These
set things on fire. Over the year it took an average of only 23 days to sell a
home. In December last year this rose to
only 35 days. Home owners received 100%
of asking in 2017 versus 98.3% of asking in 2016. This month we are averaging
99.4% of asking (based on 80 sales to January 15, 2018). We are starting the year with only 3 months’
supply. This means the pressure on “Supply versus Demand” will continue. When we add in the continued projected
interest rate offered below 4% on Mortgage Rates (assuming the Feds increase
interest rates next week (even ½%) and continued demand from Metropolitan
Toronto cashing in on equity. We can anticipate at least a 5% increase across
the city in the year ahead unless inventory of homes increase dramatically.
Fewer choices equals higher prices!
LONDON NORTH:
The number of homes that
sold in North London rose only 4.4%, based on limited supply for most of the
prime selling season. The number of average days it took to sell a home in 2017
was 21. In 2016 it was significantly higher at 34 days. This severely limited
inventory drove the average price of a home in North London beating the London average,
up 18.1%, up from $345,113 to $407,397 ($62,287). Many home owners enjoyed
competing offers. This delivered an overall list price to selling price ratio
of 101.1% (up from 98.7% in 2016). Let’s look at supply, we started 2017 with
only 2 months’ supply of homes for sale.
By December we sat at 4 months’ supply based on time of year heading
into January 2018. Inventory in December 2016 sat at 216 homes. In December 2017 we finished with 283 homes available
for sale. This is still well below a
balanced market. This would indicate
that supply will not pace demand in 2018 resulting good price increases
estimated to be above 5% for 2018. The
influence of Toronto Buyers with deep pockets of equity, and continued bargain
Mortgage rates bringing First Time Buyers and Move Up Buyers to market, will
easily bring these projections to reality.
SOUTH LONDON:
This area like North
London started the year with only 2 Months’ supply of homes offered for sale.
This limited number of homes available ended 2017 delivering the second highest
increase for all areas of the city of London with a 13.2% increase. This increase drove prices up 17.6% or an
average of $56,900. The average house price now sits at $380,000 in the South. Homeowners
in this area in 2016 received 97.1% over the calendar year. Last year with this
higher increase in demand the difference between listing price and selling
price tightened to 98.2%. For the month of January to January 15, 2018,
homeowners are getting a healthy 97.7%.
Inventories are a bit higher in South London coming into the new
year. In December inventory hit 4 months’
supply or 488 homes offered for sale. In
December 2016 the carry-over was only 2 months’ supply or 255 homes offered for
sale. The fact that there are more homes
to choose from should allow a bit if negotiation on listing price. However, 4 months’
supply is, by definition a Sellers’ Market.
We will see continued price increases. With North London continuing to
have limited inventory supply, this will definitely drive prices and activity
in London South.
EAST LONDON:
This area of the city has
always had the best bang for your home dollar with the lowest average prices in
the city. In 2017 East London delivered
the highest increase in homes sold at 18.2% over the previous 12 months. This
outstanding result in the number of homes also delivered the highest percentage
increase in home values. The average price rose 18.1% or $38,675 and now sits
at $252,820 in this area. Home owners were able to get 100% of their asking
price in 2017 up from 97.7% during the previous year. The time it took to sell
a home dropped from 32 days in 2016 to 24 days in the heated market of 2017. In
December 2016 inventory sat at 2 months’ supply of homes for sale, 186 homes
listed. This was a major contributing
factor to high demand and increases in prices for this area. In December 2017 inventories of homes
available for sale increased to 3 months’ supply or 266 homes available. Once again inventories are tight with only 3
months to start things off. All
indicators are that prices will do well in this area of the city again…Should
see leading sales volume and price gains driven by the lower average prices in
this area.
ST.THOMAS:
In our opinion this trading
area offers the best current value for a Home Buyer. We look at ST. Thomas as a “Bedroom Community”
for London. Ideally located south of London and the 401 and just north of the Summer
destination of Port Stanley with its beaches, restaurants and bars, St. Thomas
has greater infrastructure than Ingersoll Ontario, yet is better located and offers
lower average selling prices. That being said, sales in the city increased an average
of 8% for 2017. City wide inventory of homes for sale carried over to this area
as well, finishing 2016 with only 2 months’ supply available. This limited
supply resulted in the average homeowner getting 99.2% of asking price versus
98.1% a year earlier. This would indicate many homes enjoyed competing offers
at peak market time. The result, was a 15% increase, or + $33,959, to an average
price of $259,983 for 2017. The number of days it takes to sell a home also dropped
from 41 days to 27 days. Inventories of homes
offered for sale in December 2016 had dropped to 2 months’ supply. At the end
of 2017 the number of homes for sale increased to 3 months’ supply (105 active
listings) . This is still lower than the 4 months’ supply (135 active listings)
for start of 2016. This also still
positions this area as a Sellers’ Market. Once again we anticipate +5% growth
for the area. Sellers are already getting 98.5% of asking above the average for
2016.
SUMMARY:
What to do?
Don’t need to move or
upgrade? Don’t sell! The average
Home will enjoy a good increase in value again in 2018.
However, If you are a First
Time Buyer or a Move Up Buyer, TODAY is the best date and time to get moving. BUY!
Why? Interest Rates on Mortgages are
still lower today (less than 4%) than they will be by year end. Each payment is
going to reduce your mortgage on “your” home and not into your landlord’s
pocket.
With prices rising, Move
Up Buyer will make somewhere better that 5% on every new dollar that they
invest in a bigger home. That’s +$500 on
every $10,000 investment in 12 months. Going from a $400,000 home to a $500,000
home, theyll make +$5,000. Payments will increase, less than +$500 a
month. Where else can you build for the
future with tax free dollars like this?
CALL:
Gib Heggtveit or
Mary Heggtveit
Broker &
Sales Representative
RE/MAX Centre
City Realty inc.
Home Office: 519-421-1991
Email: gib@yourfavouriterealtors.com
