Welcome to the “Dog Days of Summer” which I just had to google to fully understand what is meant by that saying. Apparently it is something to do with the constellation Sirius rising in the sky which meant it was gonna be hot and steamy in Ancient Greece. We now know this time of the year as early August aka hot and steamy aka the Dog Days of Summer. Knowledge is power people.
Interestingly, if I were to choose two words to describe our real estate market this time of year, it would not be hot and steamy. I think I would choose a saying more like dazed and confused or easily distracted, one of which is a great song by Led Zeppelin (or a movie that I have never seen) the other is a phrase that was used to describe a young Cam Vandersluis on report cards from age 6-16. Actually it was more like distracts others but I digress…
This is not irregular for this time of year nor is it a departure from what we have come to expect this year in the real estate market so I guess we can take comfort in that. The summer is normally a slower time of the real estate cycle and this entire year has been a snooze to some degree with low sales numbers from start to finish.
The most exciting part about this year’s real estate numbers so far is how flat the average sale price has been. In the face of low sales, extremely high numbers of new listings and tons of inventory on the market, prices have not tanked. So when I say that is exciting, I guess what I really mean is it’s somewhat confusing.
Now, I’m not saying that a boring real estate market is a bad thing. In fact, I think that a more boring real estate market would be healthier for everyone that wanted to buy and/or sell a house but that wouldn’t feed this country’s obsession with real estate. Canadians love a dramatic market whether that be complaining about it or taking part in it, we really love our real estate.
Obviously the big thing hanging over the entire Canadian real estate market is the changes that have happened/are going to happen to interest rates and what effect that will have on prices, market dynamics, strategies, legislation etc. To this point, it’s done a whole lot of nothing. A 0.5% drop in the overnight rate and variable mortgages hasn’t done anything to fuel higher demand or prices across the country. In fact it hasn’t even changed the “slow market” narrative at all.
It’s going to take further rate cuts to actually impact affordability but it’s going to take quite a few months after that happens for the market to soak up all the excess inventory that is still sitting on the market.
Anyhow, let’s dive into the stats, with one big caveat first.
You may remember that last month I talked about our switch to a new MLS provider. That switch has completely deleted my access to crucial statistics through our MLS system and I am going to have to use the LSTAR stat packs that are released each month as my main source of data. I’m not saying that these stats aren’t accurate, they just aren’t as readily available as my previous “stats” tab in our MLS platform. I also preferred going straight to the source of the data throughout the month to keep an eye on trends, something that I won’t be able to do anymore. For now, we will stick with the LSTAR releases with a few notes to compare to previous months and years.
To kick it off, the average sale price in London was $645,137, down .4% year over year and per my numbers, down 3% from the previous month. The year over year number is hardly anything to look at, it’s basically a rounding error. The month over month data is also not a concerning drop in my mind. The average sale price has dropped from June to July in 10 out of the previous 12 years, and the only time the average sale price rose in a meaningful way was during COVID in 2020 when prices skyrocketed over the summertime. The average change during that timespan was -2.3% so colour me unsurprised.
This is about where I could just copy and paste everything from the previous few months: low number of sales, high number of new listings, available inventory continues to grow.
Sales of 408 is low even for this year. In June, there were 498 sales and in July of last year there were 466 sales. Compared to the 10 year average, 408 sales is only 65.68% of that number which is the lowest percentage so far this year. I guess we could say that our low number of sales is even lower than we might have expected it to be.
Interestingly though, LSTAR said there were 604 sales across our entire region which was 14.4% less than last year but they came up with this headline for their press release:
Make it make sense, you can’t. I don’t know why media outlets can’t just print an unbiased piece. Either we have the real estate board saying that everything is amazing or we have the newspapers saying that everything is totally shit…
New listings at 1050 would be high compared to what I have on record for last year but according to LSTAR that number is 5.3% lower than July 2023. This is where our data sets just aren’t jiving. LSTAR also says that there are 1843 active listings in London which would blow us out of the water compared to where we stood at the end of June (around 1500) so I’m not putting much stock in that figure being accurate.
However, if that is correct, and we are at almost 5 months of inventory, then this is the furthest thing from a seller’s market that I have ever seen which makes the average sale price figure even more interesting.
Days on market and days to sell are both in line with what we have been experiencing so far this year, both of which sit at 21. Again, good homes that are well priced are selling, sometimes above list price but rarely. I wouldn’t count on running a successful “bidding war” strategy right now for any new listings. Average sale price to list price ratio is 98.5%. For comparison sake, in February 2022, that figure was 120% meaning on average, homes sold for 20% more than they were listed at. I don’t think we will ever see that again.
Enjoy the rest of the summer, the rest of the year could get a little bit more exciting (which again, is not a good or bad thing) depending on supply/demand figures and interest rate announcements.
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