The REAL Market Report: September 2024

When is a market good or bad? Specifically, when is the real estate market good or bad? Is it when prices are higher or lower? Higher or lower than what? Is it when a lot of homes are selling, or few homes are selling? Are they selling fast, or are they taking longer on the market before buyer and seller shake hands, metaphorically.

What I am trying to get at is that it depends what side of the market you might be on at any given point in time and that the market is likely viewed as good to one person and bad to another. So is the market both good and bad at the same time? Here’s what I like to say:

“ The market is not good, or bad, it just is”.

Wow, that is very philosophical. Mind blown ,right? It just is. Painting the market as good or bad, in my opinion, is not a useful tool for anyone that wants to participate in said market because it makes the experience emotional. We are talking about buying and selling houses, which is already an emotional exercise, and to add another layer to that is not productive in most cases.

Acknowledging who might be put at an advantage or disadvantage due to market dynamics is useful, however, and an important thing to monitor throughout your buying or selling journey.

Now that I have said all of that, I want to acknowledge that most people would consider the market to be “good” when prices are rising, or have risen, and plenty of homes are selling. That seems to be when people are happiest with our housing market.

Why? People like to feel confident with their decisions. They want to know that somebody else in their shoes would have done the same thing and when you see it happening all around you, there’s the proof in the pudding. Social proof I believe it is called. I also read this in a market book a couple of years ago:

“People do what people like them, do”. Or close to that. A not so nice way of saying that is people have a “sheep” mentality and they follow the sheep in front of them.

So, if people are buying, it must be a good time to buy, and thus the market must be “good”. Logically, this makes no sense if the idea is to buy something for the cheapest price possible. But in reality, this is how humans operate.

Thinking about the year of 2024, and our real estate market to this point, would anyone say that the market has been “good”? The newspapers certainly wouldn’t. I will concede that most media outlets will always find an angle that paints the real estate market in a negative light no matter what is happening, for their own purposes, but that commentary certainly impacts other people’s opinions as well.

If we take a logical look at the market, this has been the best (or easiest) year to buy a house in London, in recent memory. Available inventory has soared while number of sales have dropped. More choice, far less competition, and fairly flat prices have been the headline topics so far this year.

That didn’t change in September. The stats I will share with you today will sound very similar to the larger story of 2024, but I can’t understand why nobody seems excited about the market. Well, I can understand, but I guess I don’t agree.

The average sale price in September 2024 was $620,976 an increase of .6% from 2023 but a decrease of about 1.3% from August 2024. The average sale price figure has moved largely sideways for 2 years now. There have been peaks and valleys within that time period, but no lasting or drastic changes.

Is that good or bad? Neither, it just is.

When will that trend change? That’s a good question and I think it is largely tied to two things: available inventory and interest rates.

Guess what, available inventory grew last month. There were 1869 homes available in London at the end of September, an increase of 3.7% from August. As you can probably guess, there were a lot of new listings last month and not that many sales (both compared to the 10 year average).

New listings at 1054 and sales of 400. That is a heavily tilted seesaw. The number of new listings is 27% higher than the 10 year average while the 400 sales is 23% lower than the 10 year average. Of note, both of those numbers trended higher than previous months in 2024.

Since May of this year, sales have been in the 65-66% range, so September was relatively strong on the sales side.

New listings were actually lower than the 10 year average through May of this year, but then exploded once the Bank of Canada started cutting interest rates in June. It’s interesting to see that sellers actually get more excited about the cuts than buyers do.

Let’s go down that rabbit hole a little bit in the context of “where do we think the market is going”. If interest rate cuts actually lead to more new listings, and we are expecting further interest rate cuts this year and into next year, then should we be expecting a lot more inventory to hit the market as well? I think that is a reasonable assumption, save for seasonal changes. We are approaching the cold season in Canada when fewer people list their homes for sale and we will likely see a lot of cancelled and expired listings also come off the market.

With further interest rate cuts, are we approaching a level where affordability for buyers actually changes? Will that happen over the winter? There is so much at play, it’s hard to know what will happen. I am excited to see it unfold though. Here might be a dream scenario for most people:

Interest rates come down to enticing levels for buyers but inventory remains high enough that prices remain somewhat flat. That would equate to actual increased affordability for buyers and a stable environment for sellers to list in. We will wait and see.