What a strange couple months it’s been. We’ve all had to adapt to a new way of living, and conducting business. Every aspect of what we considered ‘normal’ has been impacted, and the real estate market is no different.
The Numbers
Basically what we have seen is we have seen sales decrease by just over 55% in the London and St. Thomas area, compared to April 2019. What we haven't seen a drop in is sales prices; the average sales price has remained the same. In fact, it's seen a slight increase but it's less than a percent so I think it's negligible.
It does point to the fact that sales values have remained strong in spite of the fact that the volume of sales has been cut in half compared to the same time last year.
What to Expect Going Forward
One of the things that I love about working for RE/MAX is that it is owned by a wonderful broker, and they've done such a fantastic job of tracking our own stats of what's happening in our brokerage on a week-to-week basis . We certainly saw the same drop that the rest of the market saw. But for the past two weeks, we've actually seen those sales numbers begin to increase. So it begs the question: have we hit the bottom of the market and are we on the way back up as it relates to sales activity?
Light at the end of the tunnel?
While it's definitely not back to what it was (or what it should be for this time of year), we're well on our way to coming out of that slump. I'm certainly seeing that myself with the number of inquiries that I'm getting from people, and the activity that I have from sellers and buyers that maybe put things on hold when all of this started.
The one thing that they highlighted is that we've actually seen a more significant reduction in the number of listings that we're taking. We've seen a 60% drop compared to the same time last year, and I think it could point to the possibility that that reduction in listings is more severe than the reduced number of overall sales that we're seeing.
An Age Old Issue: Supply vs. Demand
Is there a possibility that we are chewing up more and more of the supply? Supply and demand is really the driving factor behind what we have seen in the past three years in the market. With price increases, a shortage of supply, and buyer demand increasing, and the fact that we've seen no reduction in prices whatsoever over the course of this, means we can point to the fact that the buyer demand is still outpacing the inventory that's on the market. I think that there's a strong case to be made that we will continue to see this going forward. That will continue to protect home values in London Ontario. So if you are a London homeowner worried about the value of your home, I would say, "Don't be." If anything, I think if we were going to see a reduction in the the price of your home, that we would have seen it already. As we get used to what a new normal is for us, people are going to begin feeling more and more comfortable getting back into the market and looking for their home. I have certainly seen that over the past few weeks in my own dealings.
3 to 6 Months From Now…
I think what we're going to see is a slow, steady incline. I don't think things are gonna take off. I do think that there is a possibility that we could see the values in London continue to grow. While that's probably not a bad thing, there was part of me that hoped that it would stabilize because we've seen such significant growth in the value of homes over the past 3 1/2 years. It wouldn't be a bad thing to see things slow down a little bit, and perhaps this will do that. But if we continue to see a shortage in supply of homes, then we are going to see prices grow as well.
So if you're considering a move right now, if you're thinking about jumping in and trying to buy something, I think right now could possibly be an opportunity where the demand is not quite as high. The struggle is the inventory is not as high but I think that's gonna be a struggle that we face for the rest of the year as buyer confidence grows and the supply is just not there. You might be competing even more heavily. And you have to remember that this time of year is typically the spring market, and that really hasn't happened yet. As the restrictions get lifted and the warmer weather comes, we're gonna see that spring market, it's just gonna be a month or two delayed. All of a sudden, we'll be in a hot summer market at this point.
Obviously I don't have a crystal ball on exactly what's gonna happen, but looking at what we see going on at a brokerage level, what I anecdotally see going on, I think that things are gonna pick up. If I were buying a home, I would still have a lot of confidence in the values that are being asked for homes. Overall, I think we’ve fared much better compared to other big cities across Canada, and I think we should be thankful for that.
If you want to know something specific about your house, your community, or an aspect of the economy or the real estate market that you feel I didn't cover here, then feel free to send me a message, or if you're old-fashioned, then feel free to pick up the phone and give me a call.