So long Summer 2024, hello to “Late Summer 2024”. September is less Septembrrrrrrrrrr
these days and more like August 2.0, especially as we stare down the barrel of a full week of weather in the high 20’s. Colour me pleased. A few years ago I vowed to never lament the warm weather we receive, despite how uncomfortable I get when I sweat, because we all know that the day will come in January or February when we think “I wish it were warm”. Being stuck inside on a cold, grey winter day will always be worse than sitting in the sun and perspiring a touch more than you’d like.
So I will be soaking in as much heat and sunshine as I possibly can over the next 4-6 weeks (let us pray) and denying that the winter will eventually arrive.
If you haven’t guessed by now, September is one of my favourite months of the year and would be even if it were a touch colder. I always loved school and returning to regularly scheduled programming every fall just gives me a good feeling. The NFL season is officially underway, Go Pack Go, and with it, fantasy football. It looks like I will be starting the season 2-2 in my four leagues (is that too many?) but we never let a week 1 loss get us down. There’s a lot of football ahead.
And last but not least, over the past few years I have enjoyed volunteering as a football coach at my former high school, something that I am missing this year. Between our six month old daughter and our work schedules, my wife and I are plenty busy as is. I will return to the sideline next season and keep up with our teams on social media throughout the season.
Now, onto the real estate. I usually take a long look in the rear view mirror during these blogs and dive heavily into the previous month. August is slow. It always is. 2024 has been slow. Combine those two factors and we don’t have the most groundbreaking or exciting month of stats to look at. We will, of course, do that in a minute, but I also want to take a forward facing look into the future and speculate as to where we might be heading.
Firstly, average sale price in August was $629,065. That is down 1% from August 2023 and down 2.5% from the month of July 2023. I’m not really all that surprised after my daily perusing of the sales each day on MLS. Nothing really jumped off the page all month long, not that there were very many sales to look at in the first place.
As has been the theme all year, number of sales were low compared to the 10yr average. A total of 388 sales in London last month is the lowest total in that time period since 2013 (that’s as far back as I can look on our MLS system). That total represents only 67% of the 10yr average but is only 3 fewer sales than August 2023. Consistency much?
New listings remained fairly strong, as we have come to expect, sitting at 903. That is 19% higher than the 10yr average and is about 8.5% higher than last August.
Of course, with new listings outpacing sales, we are bound to see in an increase in active listings, or available inventory. 1803 homes available on the MLS at the end of August 2024 is a lot. Do some quick math and that gives us 4.7 months of inventory. Another quick stat: sales to new listings ratio is 43%. Combine those two data points and we get a Buyer’s Market. It is undeniably a buyer’s market out there no matter how you look at it, unless of course you want to look exclusively at average sale price.
Is a 1% drop year over year or a 2.5% drop month over month a serious dip in prices? Not really, especially when prices usually drop July to August. The average sale pice in June this year was around $665,000 and that is a 5.75% drop in two months, I guess that looks a little more emphatic.
Here’s my point. With how much inventory is available, and so few homes selling, I think we could reasonably expect prices to drop lower than they have. If we look at the market since the start of 2023, we have had record low numbers of sales, and record high available inventory (in recent history) for buyers to consider. The fact that prices are up over 10% since January 2023 tells me what I need to know about the cost of a home in our city: don’t expect it to get significantly lower than it already has.
Quickly, before we look forward, in today’s market, sellers need to be very realistic about their home selling and recognize that only 4/10 homes that hit the market are going to sell in a reasonable time. Buyers can enjoy taking their time to make an informed decision, avoid competing with other buyers, but don’t expect to have every lowball offer you throw out to be gobbled up by desperate sellers.
So I’ve said that I don’t think prices are going to get any lower than they have. At the same time, I don’t expect prices to sky rocket as the overnight rate continues to be cut by the Bank of Canada. Why? Let’s revisit the available inventory that we have on the market. It’s going to take a long time for that inventory to sell or be taken off the market unless the number of active buyers triples in a short time period. The tough part? Most home buyers are also home sellers which means there is not a real change in the supply/demand balance.
Demand should certainly increase as rate decreases take place but that shift is not going to happen overnight. It’s going to be a slow, confusing time period in the real estate market, much like what we have experienced since the first rate increase happened in February 2022. At that point in time, there were 5 times as many buyers as there were available homes on the market that led to the rapid increase in prices. Why were there so many buyers? Low interest rates would be one reason.
Could we see a lot of the available listings that are currently on the market be taken off the MLS? Sure, but I don’t see why a seller who has had their home for sale during the slowest months in recent memory would decide to take their home off the market as more buyers theoretically enter the market. If anything, we will see even more inventory come to market if sellers believe that conditions will begin to favour sellers.
I think the rest of the year will play our similarly to 2023. Number of sales remained low throughout the fall and into the winter, prices remained fairly flat. Where I could see things taking a turn is in the new year, especially if a few of these things happened:
The Bank of Canada gets aggressive with interest rate cuts.
Sellers take their stale listings off the market as we approach December/January.
Buyers from other parts of Ontario start targeting London in higher numbers.
New home builds continue on their current (terrible) pace.
I could see some of those things happening but I could just as easily see none of those things happening. Time will tell.
Here’s the bigger question: do we want the housing market to change? Is it a good thing if more homes sell or that prices go back up? People assume that as a Realtor I would argue “of course”. But I’m not so sure. What is in everyone’s best interest is certainly not home prices running up 20% in a year. When I first started selling real estate, we would talk about 4% on a yearly basis as a reasonable expectation for the value of a home to increase. That’s a decent amount. A balanced market is exactly that, balanced and not favouring either buyers or sellers, so surely that is more desirable than what we have experienced recently. Perhaps this is a discussion for another day, but it was something that was on my mind so I thought I would bring it up. I would love to hear your thoughts if anyone cares to share!
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