Is it fall yet? I sure as hell don’t think so, but August is over and school starts tomorrow. Add in the NFL season kicking off on Thursday, pumpkins for sale at every grocery store, pumpkin spice lattes in every Starbucks cup and you might be convinced. But TECHNICALLY, it’s summer until September 21st and the weather this week has me thinking of sun, cold drinks and all of my favourite summertime activities, not sweaters and soup.
Nonetheless, August is over and we can take a look in the rear view mirror at the real estate market through the end of the month that was. And it was quiet. Very quiet. Now, that is not atypical of the month of August, I always tell my clients that outside of December, August is the slowest month on the real estate calendar. Why? Mostly because of everything I said above, folks in Ontario would rather enjoy the last bit of “summer” before school starts and we return to our routine lives. However, this year we got a double dose of cooldown thanks to the previous rate announcements from the BoC and the pending announcement which will come tomorrow, September 6th. There is a lot of uncertainty in the air and we might have exhausted whatever resiliency the market had remaining after 10 rate increases. That remains to be seen.
Now let’s get into the meat and potatoes of the matter. The average sale price in London for the month of August checks in at $636,325. That is about 1% lower than it was in July and about 4.6% lower than it was in April which currently represents the peak of our market in 2023. Might that change? More below.
We are still well below the real peak of the market which occurred in February of last year, right before the first rate increase from the BoC. Interestingly, we are relatively in line with prices of 2021, right before that massive run up in prices. Here is a graph showing the average price in London since the beginning of 2021:
Pretty flat aside from the peak early in 2022 and the low point of January 2023. Now let’s go one year further to add some very interesting context to this conversation:
Up 27.1% since August of 2020. And I really think that peak in February shows the scary potential of our market if and when rates start to go down. Because I‘ll tell you, buyer interest has not declined one little bit. Affordability is low right now, and homeowners can’t sell their houses fast enough, but there are a lot of people that are just itching to make a move.
Next up, sales and listings stats. These two numbers are combining to make a very interesting landscape for anyone that is looking to participate in the market this fall.
Last month:
New listings 830
Sales 386
The first number is high, the second one is low. Very low. The 830 new listings we saw represent a 10% surplus over the 10yr average and the 386 sales represent only 67% of the 10 yr average. That’s wild in my opinion. This is the lowest number of sales in a single August in the past 10 years, maybe more, and I know that the media at large are going to have a field day with it. Beware the pending headlines that claim the sky is falling and that real estate is about to decline in value. Beware.
Sales numbers have been low all year, just not to that extent. And the previous months of low sales and high listing numbers has left us with a lot of homes on the market. Currently, 1275 homes on the market in London. That is the second highest number on record since August of 2016 (1325 active listings in the June of 2022) and there are a ton of quality listings available right now that I think could be had for a very attractive number. The tough part as a homeowner is also selling your home. Something that a lot of homeowners or potential sellers have experienced recently. And that brings me to my biggest point for the month: we are in a balanced market. A truly balanced market, not a soft sellers market. The numbers says so and the real life experiences of buyers and sellers say it as well.
I have never experienced a balanced market in my time as a realtor, it has always been degrees of seller superiority. But for the first time for me and a lot of my clients, the scales are balanced and opportunities abound. And I will add a big caveat to that: FOR NOW. Why do I say that? I believe the next 3-4 weeks will either move us back to a sellers market, or push us further into a buyers market. There is a massive swing that could take place, but I have a very hard time believing that the market will just stay flat as is.
We typically expect a big change in the market during September and October as buyers return. Will that happen this year? I’m hopeful but also realistic. Rates remain elevated from most peoples’ expectations, but they might be levelling out for the foreseeable future. And as I said above, there are so many good listings out there right now, it’s tantalizing to anyone who has been hoping to make a move. Those two things could combine for a hotter fall market.
On the other hand, buyer activity could remain low and the active listings will continue to pile up. If that happens, I would expect prices to finally see a bit of a decline and the best buying opportunity in the last 10 years during the months of December and January. Just be prepared for some changes ahead and if you are considering participating in the real estate market, have everything in order to take that leap when the time is right.
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