Does anyone remember why I called my monthly market musings the REAL market report last year when I started this blog? It was because I wanted to provide some factual, non click baity insight into the real estate market for London as opposed to what I usually see from larger media outlets.
I was reminded of this last week when I read what the London Free Press wrote about the July stats. “London Area Home Sales Plunge Despite Interest Rate Cut”. Would you say this is a negative headline? I would. Is it factual? Technically yes! Does it give a good picture of what is happening in our market today? No it does not.
Firstly, the article is based on the stats for all of LSTAR. Including smaller municipalities, communities and towns around London. I focus on London exclusively in these reports and there is a big difference, so there article may not paint an accurate picture of the market in London. I just really don’t like how they cherry pick stats to paint a picture that buys clicks online and fuels a negative narrative that I think a lot of would be buyers and/or sellers would like to see come to fruition.
I also have a big issue when they run the typical playbook of finding a mascot for their narrative and talking about their experience in the market. In this case it is a homeowner in London who couldn’t sell their home in a highly competitive market segment, in an area where there is a ton of competition and at a price that in my estimation, was at least $100,000 too high. But in the eyes of the LFP, they make this out to be the complete picture when it comes to our real estate market.
Here’s the reality: sales have been low all year, it’s not groundbreaking news to say that sales are lower this year than they were last year. We’re also not talking about a 20-30% decline, and we’re also not talking about a decline in prices, at least in London. I would understand if a massive decline in sales numbers coincided with a similar decline in prices, that would be emblematic of a seriously declining market. But low sales numbers that are in line with the past 6 months and level prices are not indicative of the picture that the media is painting.
I find it comical that they imply a .25% drop in the Bank of Canada’s overnight rate was supposed to light the market on fire and motivate every buyer in the city to jump into the market immediately. Or that they skate over the idea that a lot of buyers are currently waiting for rates to drop further before they do enter the market (whether this is a good idea or not). Because that is a very real situation right now.
Anyhow, I could go on and on about how terrible mass media reporting is in our country, or North America, but how about we get into the stats, shall we?
The average sale price in London increased in July, both month over month and year over year. It wasn’t a massive jump, as I thought it was going to be, but it was interesting to see as we head into the summer.
The figure of $665,229 is 2% higher than the previous month and about .5% higher than June 2023. The 2% jump from May is more telling in my opinion as the market is certainly going to change quite a bit in the last half of 2024 with the expected rate cuts to come. By the way, about 70% of the way through the month, the average sale price was sitting over $680,000 and I was expecting to see a jump of about 7-8% this past month. There were a lot of sales in the lower price points over the last week of the month which brought down that average.
Like we noted above, sales numbers were down from last year but they were actually up month over month in London! Didn’t read about that in the LFP article. 496 sales in London last month is 1.6% higher than May 2024 but 7% less than in June 2023. That might be big news if we hadn’t seen similarly low numbers since February.
Here’s the bigger story with these two stats: sales numbers and prices typically decline from May to June. Over the last 12 years, both sales and average sale price have been lower in June than in May in 8 out of 12 times. So could we now make the argument that the market in London is actually accelerating heading into the summer? Sure we could. However, that is probably just as unfair as it is to imply that the sky is falling and nobody will ever sell a home in London again.
Now, we are currently in a huge transition from one MLS provider to another and my access to some data points has definitely been impacted. I don’t have a reliable source for number of new listings last month, but I can say that active listings remain elevated in London. At the end of June there were 1558 homes on the market which is high. If we look at months of inventory, which is active listings divided by sales, we end up with 3.14 (hello Pi) months of inventory. 4 months or over is widely considered to be indicative of a buyer’s market.
I will say that in some market segments, we are 100% in a buyer’s market. If you want to buy a 2 storey house for more than a million dollars, similar to what was available per the LFP article, you have over 200 homes to look at. Do you know how many homes matching that description sold last month? 28. That means we have, at minimum, 7 months of inventory in that market segment. We will definitely call that a buyer’s market.
How about a detached house for under $600,000? Currently available: 177 homes. Sold last month: 120. Definitely not a buyer’s market. And guess where a lot of buyers are currently looking! It’s certainly not the $1M+ market.
Any guesses for the next BoC announcement on July 24th? My money is still on another .25% cut. Let me know where you’re putting your bets, I’m happy to enter into some friendly wagers!
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