Beware the headlines!!! Every news and online media outlet would have you believe that the real estate world is ending and that we are off to the worst start to the year on record. Touting numbers like "25% drop in prices" and "lowest number of sales in over a decade" while accurate, might not paint the full picture.
In fact, I think it paints an entirely inaccurate picture that uses negative sentiment toward the real estate market to drive readership, clicks and comments. Nothing new there, but I digress...
So then what am I thinking the real story is behind a large drop in prices year over year and a relatively low number of sales? Good question. I would contest that both stats are not good representations of the market currently and that if taken in a more appropriate context, provide us with a much rosier outlook for our local market.
Comparing prices to a year ago today is a damning stat there's no denying that. But we can rationalize that discrepancy in our minds with a quick look at the BoC rate increases over that time span. If you aren't already up to date on that, have you been living under a rock?!?!? Two very different scenarios playing out 365 days from each other. Is it fair to base our opinion of the market off that one statistic? I think not. Consider that our average sale price in London is up 27% since 2020 (9%/year) and I certainly feel a different way about my home's value at the moment! That's a killer return and if I could get that guarantee anywhere else, I would offer up 100% of my net worth in a heartbeat to capitalize on the opportunity. This wider lens view of the market is a more appropriate measure of the long term viability (and sensibility) of home ownership in our local market/Canada.
I believe that most people would like to think that a homebuyer is going to own a home for longer than 3 years (I think the government would mandate it somehow if they could sell it to a big enough portion of the population) because "that's what homes are for". I'm sure there are quite a few "investors" that are learning an unfortunate lesson in this market due to our 1 year price adjustment.
But again, 27% over 3 years is something that any rational person would sign up for, so there's your contrarian view to the big media headlines.
Secondly, talking about low sales numbers is nothing new, over the past 6-8 months so I don't see why that is such a sensational headline for people to consume. Sales numbers have been underwhelming since June of last year, a phenomenon that is also due to rising interest rates and a drop in consumer confidence. I know for a fact that there are a ton of people in our market and across Canada that would love to transact in the market right now but just can't do it without knowing what's happening around the corner.
Alright, low sales numbers are nothing new, but that is a spicy headline that the media can latch onto to drive clicks, which we can see through. But I'm going to take it a step further and argue that January actually represented a turnaround of sorts from our "low sales activity".
If we compare the sales from each month since June of last year to the 5 year average of sales in those months, January of 2023 is the highest number at 69.5% of the 5 year average. The months from June to December of 2022 had sales that were between 58-63% of the 5 year average number of sales. 69.5% is quite high compared to those numbers! That is certainly a trend I would like to see continue in the coming spring months.
Here's the full video breakdown for your viewing pleasure:
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