As I sit down to write this blog, I see that I haven’t written anything since last month’s Market Report. Yes, March 2024 was a very busy month in my life, our family grew by one as my wife and I welcomed our baby girl, Arden Kate Vandersluis, into the world. The past few weeks have been so wonderful as we learn our new roles as parents, we grow more in love with our girl every day.
We are also entering the busiest time of the real estate calendar, April, May and June, when a large portion of the year’s new listings and sales will take place. What a time! I am going to strive to continue to write at least once a week, something that should become easier to manage over the coming weeks. For now, we will dive into some very interesting March statistics.
A tale of two statistics, this month, both telling two separate stories. Which is more important and which will have a more important bearing on the “busy season” this spring. So let’s introduce this battle royale: Average Price vs. Number of Sales.
The average sales price in London last month came in at a whopping $637,597. That number is up 6% from the previous month and 3% year over year. This number saw a similar jump last year but in the month of April. We then had two strong months in May and June before the final two BoC rate increases squashed any momentum that the market had and we had a smooth decline into the fall.
Interestingly, this is one of the largest price increases from February to March in the last 12 years on a percentage gain basis. In fact, the average sale price has gone up from February to March in only half of those years, with an average change of +2.68% in that time span. That does provide some solid context for our 6% bump which was already an impressive number.
You can see the pop in price this past month as well as April 2023.
Now, I did mention that this story had two sides to it and when we look at number of sales, that becomes clear. There were only 468 sales in London. That is low, very low. How low? The lowest actually. As far back as our data goes, we just experienced the slowest month of March in record.
468 sales was only 74.7% of the 10 year average. Yikes. Remember last year, every month it seemed as though hardly any sales were happening? March of 2024 is still the worst performing month compared to the 10 year average I can recall.
In my mind, it is very hard to reconcile these two numbers. How did the average sale price go up so much when seemingly nobody (or hardly anybody) was interested in buying? I have a couple theories, but we will get there soon. How about the rest of the data first.
New listings were hardly any more impressive than number of sales coming in at 816. That is 86.2% of the 10 year average. This checks out, because low number of sales typically means less people listing their homes. So new listings were down, but not quite as much as sales, ipso facto, active listings should then increase.
At the end of March, there were 1095 active listings in London. That is a large number this early in the year. Over the past 5 years, we have only accumulated more than 1000 listings in the spring months, aka April, May and June.
This is becoming my favourite statistic. I will be very interested to see if we continue to add more and more inventory over the coming months, this will temper any gains or momentum in sales price that we would normally expect in a typical market. This is certainly not a bad thing, more inventory is something that I think most buyers would welcome. Modest price gains would also give some normalcy to the market which we have lacked since 2020 really.
The one thing that might combat rising inventory in the fight for price stability: interest rates. I also believe that interest rates (or the expected decrease in interest rates) are keeping a lot of buyers on the sidelines right now. I find it interesting that buyers seem to want to wait for interest rates to come down despite the likely occurrence of rising prices and competition. People are funny, they want the certainty that comes with making a decision that a lot of other people are making at the same time even if it has negative impacts on their own circumstances.
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If you’ve made it this far, I would love to hear what you think about the psychology around the interest rate announcements and when that first rate cut might happen.
I do want to throw out a couple more statistics that support my anecdotal experiences in the market recently. I have found that “good” listings are moving quickly, often with competing buyers, and for prices that were unimaginable over the previous 6-7 months.
When I say good listings, I mean homes that are presented well, in good neighborhoods, and accurately priced. I am not surprised to see that a lot of the homes being listed today are still at prices that make no sense, even after the price gains of the past two months. Wishful thinkers or delusional sellers?
Here’s the funny thing, a lot of homes that have been sitting on the market for 100+ days are now getting scooped up. This is a sign of a busy or ascending market in my opinion and might give precedent to the sellers who are waiting it out to “get their price”.
I’ve got some data to back up what I mean here. Days to sell tells a very interesting story and is valuable compared to days on market because these are homes that are actually selling, not just sitting on the market.
The average days to sell last month was 25, down from 34 in February and 41 in January. That already shows a positive trend. This is the kicker though, the median days to sell in March was only 14. That is a pretty big difference and it shows that half of listings are selling in 14 days or less. There is no reason that a “good” listing should not move in two weeks these days.
Given all this information, where do we go from here? Personally, I think we are going to see an increase in both number of sales (would be hard not to) and sales price both in the short and medium terms. I think the general sentiment in the market right now aligns with that outlook especially when you look at what is actually happening out there.
We will be back in a month to dive into the real spring market and confirm or debunk these ideas!
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