The first of many market updates a la blog format. I have never pretended to be good at editing videos but I thought I would give it a shot in the hopes that my market updates would live on Youtube in a longer format video library. But, I quickly realized that I did not enjoy or have talent at editing videos, so here we are! I DO enjoy writing blogs and I am hoping to continue to grow the readership here moving forward.
Alright, onto July of 2023. The summer is slower that the spring in the real estate world, at least it has been over the past few years since COVID and it’s not hard to imagine why. Folks are busy travelling, visiting the cottage or enjoying the best weather we see year round. There are just a lot of other things to do and think about during a Canadian summer than peruse Realtor.ca and go to open houses.
So I wasn’t surprised all month long when I would check in on the stats to see that sales were lagging behind the previous spring months and were on track to settle in below the 10 year
average for London. This in fact has been a theme all year long as number of sales have been lagging the ten year average every single month.
I was however, surprised to see where our average sale price was trending to. Based on lower number of sales and a decent number of new listings, as well as stories from colleagues and my own experiences with clients, I figured that the average sale price would dip in a meaningful way from the threshold that was establish in April-June. Boy was I wrong and that’s where I want to start our analysis today.
The average sale price sits at $644,043 for residential sales in London during July of 2023. This number is down from $661,970 in June (down 2.7%) and $666,975 in April (down 3.4% from the high point of this year). This is what our average sale price looks like over the past 5 years:
Prices are almost on par with July of 2021 and 2022 but are up 31.4% since July of 2020. What a return in 3 years.
Something else I wanted to note, the average sale price in July has dropped from the average sale price in May in 9 of the last 10 years. On average over that time span, that drop is about 3.1%. This year, it was 3.29%. So this was the most average and expected thing that could have happened. Here’s the full data set over the past 10 years with price drops from May to July noted at the bottom:
Moving on to sales and listings. As previously mentioned, sales were below the 10 year average and listings were above the 10 year average. Sales: 466 which is 74.3% of the 10 year average. That also represents the second lowest number of sales in the month of July over the past 10 years, July of 2022 being the lowest at 390.
New listings of 950 is 8% higher than the 10 year average. That would be the third most listings in a July over the same timespan. Now, we are seeing a lot of properties being re listed multiple times so it’s not the most accurate stat, but it is a benchmark for us to consider. That 108% of the 10 year average is also considerably higher than any month this year. We have seen anywhere from 74% to 94% of the 10yr average in 2023 which means that sellers weren’t afraid to list their homes this summer. Probably because prices have remained strong, especially after the most recent rate increases.
You can see why I thought that the average sale price might drop a bit more. New listings are rising, past what we would expect in 2023 and sales are remaining at suppressed levels. I like to combine those two stats to give us something called the Sales to New Listings Ratio (SNLR) that gives us a bit of a read on the heat of the market. (Aka for every 100 homes listed, how many sold).
SNLR in July of 2023: 49% which would put us in the “balanced market” category. Anything over 60% would be considered a seller’s market, anything below 40% a buyer’s market. It is worth noting that the SNLR has been dropping over the past few months which means it should be easier for a buyer to land the house they are looking for. I say should because that’s not really what is playing out in some sectors of the market. Anecdotes to follow.
The last stat I wanted to look at is the number of active listings and subsequently the months of inventory. Number of active listings tells us exactly how many homes are available in the whole city and when compared to the number of sales we just had, it tells us how many months of inventory are currently available.
Active listings are sitting at 1224 in London, right now. That number has been rising since bottoming out last December, something that is pretty typical on a yearly basis. But 1224 active listings is pretty high compared to the previous 5 years. Here’s a chart:
We know that active listings bottomed at the end of 2021 which fuelled the craziest market of all time to being 2022. From there, active listings rose and then fell in the fall. We are seeing something pretty similar play out in 2023. When we compare active listings to number of sales, we see that we are at 2.6 months of inventory. 4 months of inventory is considered a balanced market, so by that metric we aren’t quite there yet and I think that sentiment is matched in the reality of the market right now. There are still active buyers out there and some sectors of the market are still very hot.
If you are currently looking for a detached house under $800,000, chances are that you are going to compete for attractive listings. Sure there are homes that have been sitting on the market for 30+ days at that price point, but there’s a reason for that and I’m sure you can guess why. Attractive listings are selling in 14 days and some of them are even able to attract multiple offers whether that is by design or it just plays out that way.
Townhouses and apartments aren’t selling quite as hot right now and there are some great options available on the market right now. As a buyer, I would be hunting for a serious deal. As a seller, I would evaluate my situation and know that you’re going to face some decent competition.
Anything over $1M is slow and it gets harder to sell the higher you go. But just know that those houses aren’t being given away either.
Alright there it is! The first REAL Market Report in blog format. I know it’s stats heavy but I love numbers and Microsoft Excel so thank you for sticking it out with me.
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