Alright, it looks like it is time for our monthly real estate recap for the month of April 2024. I’m sorry, you mean it’s not April, it’s actually February, but somehow it has been about 5 degrees outside for the past two weeks and we have been enjoying so much sun that everyone is still tan from their Christmas vacation trip?!?!?!?!?
Yes, it feels like spring out there despite the fact that we just turned the page on January and we still have a few weeks of “winter” to battle through before we get to the good stuff. I am not a fan of February as a whole, I think it is the worst month of the calendar year and somehow it arrived extra fast this year because January seemed to be over in the blink of an eye. Oh, and we get an extra day this year. Fabulous. I’ll be enjoying as much of this sun as I can. See you on the golf course maybe?
Yes, this is the REAL Market Report for January 2024, print edition, and we are going to get heavily into some stats. First and foremost though, let’s examine the significance of January’s stats in the context of the real estate market. January is one of the slower months of the year for home sales so it does warrant the question “how important are the January stats?” Fair question! We’re still gonna dig into them though and see what we can glean from a shallower data pool.
Historically, the sales in January account for (on average) 5.2% of the yearly sales in our area. In 2022, January’s sales made up about 7.3% of the yearly sales because it was one of the hotter Januarys on record, and because sales fell off a cliff later that year as the BoC started raising rates. But even that falls short of an even 1/12th from the calendar year.
But here’s a fun exercise: based on the number of sales that we had last month, and the average contribution of Januarys past to the yearly sales totals, how many sales will we see in 2024????? Easy calculation, and it allows us to start with the number of sales in January as opposed to the average sale price which has been highly unentertaining as of late. Get your calculators out!
Last month, 320 sales occurred in London. If the average January represents 5.2% of the yearly sales, we divide 320 by .052 and voila! We can determine that there should be 6153.85 (rounded) sales this year. That total would put as right in the middle of the past decade in terms of yearly sales volume. Sign me up. That is the message this year: a return to “normal”. Something that would be welcomed by many I’m sure.
The last thing I want to say about sales numbers in London is that they are up considerably from the previous year. 2023 brought us only 246 sales (wild) which gives us a year over year increase of 30% (massive). Okay, one last thing. Those 320 sales represent 94.79% of the 10yr average number of sales for the month of January. Again, bring us back to normal please.
We touched on it above so might as well take this opportunity to jump right in. The average sale price in London last month was……… $608,826. A .25% drop from the month of December but an increase of 8.5% from January 2023. Keep this in mind: if you look at the graph below (average sale price since January 2022) the month of January 2023 sticks out like a sore thumb so we won’t put much stock in the 8.5% number and look closer at .25% drop from the previous month.
Look at the last five bars of that graph. That average price has gone up and it’s gone down, but since the end of the summer last year, the average sale price is within 1.3% of where it was. That is remarkable if you ask me. Does stability equate to normalcy?
Here is something that is not quite normal: over the past 10 years, the average sale price has increased from December to January 8 out of 10 times. The last 2 years are the odd ones out. Is that the start of a trend? Along the same thread, the average sale price has increased from January to February 9 out of the last 10 years and the lone decline came way back in 2015 (the start of my available data). So I wonder what we will be talking about next month.
Of the big 3 we have one last thing to look at, number of new listings. That figure was 593 last month. A very strong (or normal) showing. 98% of the 10yr average is about as normal as it gets. Before we go much further, I want to give a big caveat to this particular statistic and it’s importance over the past 2 years or so.
Number of new listings is highly impacted by properties that don’t sell and are subsequently “relisted” on our MLS so as to appear as a “new” listing. How does this happen? Listings don’t sell. Strategies fail. Homes sit on the market and the listing expires. Homes sit on the market, the listing agent and seller want to execute a price reduction, and rather than edit the current listing, they terminate and then relist at the lower price to show 0 days on market. Why? New listings get attention on the daily hot sheets. Is it good attention? Depends if you did a price reduction and for how much. Relisting at the same price that you have been offering the home at for 90 days (or more) is not good attention. Reducing the price by $5000 is probably not going to have the desired effect. You see my point. We have a ton of “new listings” that aren’t in fact new, but old, recycled, sometimes updated, listings that clog up our system and fun discussions about data. This is a symptom of our current system wherein not all homes are selling. A wild concept to some, but a serious reality: not all homes sell or have sold since being listed in a quieter market.
How prevalent are “relisted” properties? I’ve been keeping an eye on “new listings” as of late to suss out the perpetrators of the above mentioned activities. From my observations, about 40% of the “new” listings are actually properties being relisted. Either expired, cancelled, reduced etc. but they have been on the market previously. Some of these listings are for new build homes that will be on the MLS until the builder sells out their stock in a given subdivision. Those are often not reduced in price. A builder might have 1 listing active online for 30 lots they have available in a single subdivision so they keep recycling the 1 listing. That’s the most harmless example of what I’m talking about. The worst offenders are the sellers that insist on listing at the same price that has been advertised for 100’s of days without selling. Why would somebody all of a sudden become interested in your stale (overprice) listing??? There is no acceptable response here.
That’s me bashing a major stat, thank you for joining in my rant.
Now that we have number of sales and number of new listings, we get one of my favourite secondary stats: SNLR or sales to new listings ratio. How many homes sell for every home that is listed? 54% of them. For context, in a hot market that number is often 80 or 90%. 54% puts us firmly in a “balanced” market. Does balanced mean normal?
Another stat that I have become quite fond of lately is number of active listings. This new found friendship has to do with the aforementioned falling out with new listings. Currently, active listings is giving us a much better indication of what’s available to buyers and there are some fun discussion points I would like to mention. Firstly, where does this number sit? 964 in January. Compared to the past 5 years, that number is high. Compared to the past 10 years, not that high. Normal? Maybe.
Here’s something really fun: active listings have increased from December to January every single year, until this year. Active listings actually dropped last month and are continuing on a downward trajectory that began last fall. If active listings continue to decline in the coming months, and buyer activity continues to increase as it usually does in the spring, we will see the return of the dreaded “bidding war”. You can see this trend playing out below.
When active listings are low, competition amongst buyers is much more likely. Less to go around as seen in what was the hottest market of all time: January through March of 2022.
Multiple offers are already happening FYI but based on current momentum and sentiment, the back half of 2024 and the first half of 2025 could be even more competitive, even if they don’t reach the same level on the heat index that we experienced early in 2022.
You heard it hear first folks! See you next month for another look at our real estate market.
Yorumlar