“Waaaake me up, when September ends” Sings Billie Joe Armstrong, lead singer of Green Day. Or was it just a bunch of realtors and would be sellers that were pining for the previous month to end and/or for interest rates to finally stop rising. In all honesty, this was the slowest month of real estate sales that I have ever experienced. Also in all honest, that’s a really great song too, but I digress…
We’re here to talk real estate and the current picture of our local market, which isn’t a pretty one, depending on your point of view. But it seems that everyone has the same point of view, something that I will touch on a bit later. First, let’s get into some statistics.
Average sale price last month: $617,303. That is about 7% lower than $666,975 average sale price that we experienced in April. Not a massive drop, but not insignificant either. A lot of folks are pointing to a smaller sample size and the mix of homes that sold as the real reason that the average sale price dropped more last month, and I would tend to agree. There were far fewer sales in the higher end of the market that would normally lift up the average sale price, but that in itself is irregular for the entirety of September. Most real estate market watchers would put September and the fall market in a fairly “strong” category when considering the cyclical nature of our real estate market. But again, diminished buyer activity is a very important aspect of the current market and something we have been experiencing since the middle of last year.
Next on the docket: number of sales sits at 344. That is low, very low. How low? That would represent about 65% of the previous 10 year average for the month of September. Just less than two thirds of the expected sales happened last month, a trend that we have seen occurring in almost every month of the year so far. In fact, if we were to compare monthly sales to the 10 year average, September at 65% would represent the lowest percentage, while the month of May would be the absolute highest, still at only 81.5%. Add that all up and we should expect to see a record low number of sales for 2023 as a whole. I’m predicting around 5000 total sales or 75% of the 10 year average.
Now, on the almost opposite end of the spectrum, new listings were at a very robust 944 across the city. 14% higher than expected over the 10 year average. It’s extremely interesting to see these two numbers move in opposite directions, I do have a theory as to why, I will explain after all the numbers and data! I also find it interesting to see that the average list price of new listings last month was slightly up from August at $740,000 ish. This isn’t really an indicator of where the market is at, because often times list prices are ridiculous and don’t actually represent market value. But, it also shows that there was still a good mix of homes listed. If the average sale price had dropped significantly, we could argue that “no higher end homes were listed” or something of that nature. It also gives us a bit of insight into seller mentality in that their expectations about prices haven’t dropped all that much.
Last stat: active listings in London are 1360. And that is the highest I have ever seen it since I started selling real estate in 2017. It’s higher than at any point last year and I think it is going to continue to go up. There are so many options on the market for buyers right now. In some cases, I think there are too many options for buyers. It is certainly overwhelming when you are looking at 8 houses in one day and trying to decide between a few very good options. It’s also distracting to see this many listings. “Buyer’s Market” comes with it‘s own challenges for buyers.
To wrap things up, let’s dive into the minds of market participants right now. At the beginning of the post I said that ”everyone has the same point of view” and that a “buyer’s market comes with challenges for buyers“. What do I mean when I say that? This is an inefficient market if your goal is to buy a house and move, UNLESS you are a first time or cash buyer without a house to sell. If you have a house to sell and you need to do so in order to move into your new home, you have three options, all of which are impacted by the current state of the demand/supply equilibrium.
#1-You can sell your house first and then decide on a house to buy.
#2-You can find the house you want to buy and then make an offer that is conditional on the sale of your home.
#3-Buy the house you want, with no conditions, and take your chances with your own house on the market.
Which of these options is best? That depends on the buyer/seller. None of them are without their risk and they are all very much impacted by the slow moving market in our area. And when I say that everyone has the same view point of the market, it is because of this: if you have a house to sell, and you really want to move, it is extremely difficult to do so right now. First, deciding what you are really looking for in a new home. Second, choosing how to go about it based on your own unique situation. Lastly, finding enough motivation to actually put yourself and your family through this lengthy process.
Inefficient markets are hard for everyone. At least in a market where every house is selling, you have the confidence to participate knowing that your home will sell once you find your next home. That stability is completely gone from the equation at the moment.
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