The London housing market is no stranger to record-breaking activity, with the strong trends of 2020 anticipated to continue (and according to some projections, accelerate) well into 2021.
To understand the increase in sales within the London housing market, it’s best to look at the community and what makes this city stand out. Since COVID-19 has restricted Canadians’ social activities, more and more people are setting their sights upon opportunities that offer easy access to parks and plenty of fresh air. London offers all that, combining plenty of urban amenities, ample employment opportunities and leading educational institutions with greenspace such as Victoria Park. Victoria Park provides annual events for the entire family to partake in, including a skate park and skating rink, allowing utilization of the park all year long.
But that’s not all that’s drawing homebuyers to the London real estate market. Below we explore the trends that have defined this local market over the past month, and why this Southern Ontario destination continues to burn red hot!
Rise of the London Housing Market in 2021
While 2020 set the stage for an increase in the Canadian real estate market, 2021 is taking the London housing market by storm.
London and St. Thomas Association of REALTORS® (LSTAR) President Jack Lane explained that “2021 came in like a lion for the LSTAR housing market, which continues to see very low inventories and record home prices in all its main areas. Across all LSTAR main regions we witnessed increases not only in average home prices – which can be sometimes skewed by a few outliers – but also in the HPI benchmark prices for these regions – which paint a more accurate picture of the local property values.”
In its latest market update, LSTAR announced that in February 2021, 824 homes were sold, setting a new record for the city. Compared to February 2020, this was over a 19% increase in sales, the highest for the month of February since 1978, when LSTAR started to track data.
In February 2021, the MLS® Home Price Index (HPI) benchmark price was $536,500; this price is yet another record-breaker and marks the second consecutive month that the composite HPI price has surpassed $500,000. The HPI reflects the value of a “typical home” as assigned by buyers within the given area based on various housing attributes, and can differ from the average sales price.
In contrast, the February 2021 average sales price for a London home came in at $616,065 (across all LSTAR areas), another record-breaking number for the region.
Lane added, “This is the sixth consecutive month of record sales, demonstrating just how strong the housing marketplace is right now.”
Lane further noted that at the end of February, there were 0.6 months of inventory. St. Thomas was the lowest, with just 0.4 months of inventory, and Middlesex was the highest with 1.1 months of inventory. Inventory is an important unit of measuring the balance between sales and supply of local real estate, indicating how long it would take to liquidate existing inventories at the current rate of sales activity. These low inventory measures for London illustrate just how hot it’s getting in this local market.
London Housing Market Comparison Guide
As with the majority of areas in Canada, the London housing market is expected to remain strong throughout 2021. At the end of 2020, RE/MAX anticipated that residential properties in and around London would increase upward of 10% in 2021, to $489,077. The region has already surpassed that expectation. The shortage of available homes should continue to drive prices up as sellers keep a strong foothold in the market – a trend mirrored in real estate markets across Ontario.
When comparing prices, it’s important to measure the ratio between sales-to-new listings. LSTAR’s ratio was 81.9%, which CREA attributes to a seller’s market (a ratio between 40% and 60% is typically what is seen within a balanced market). Across LSTAR’s five areas, all have ratios exceeding 60%, the highest being Strathroy at 138.1% and Elgin County with the lowest at 66.7%. LSTAR REALTORS® sold 547 homes in January 2021, with 413 being single-family homes, 57 being townhomes, and 57 being apartments.
A Driving Force for London Home Buyers
With real estate in high demand, property values steadily increasing, and market analysis for 2021 showing a record-breaking year ahead, it’s important to understand the driving force behind these market conditions.
More families and individuals are on the hunt for larger homes to accommodate home offices and virtual learning, seeking larger yards and closer proximity to outdoor recreation areas such as parks and lakes. The areas outside of urban centres tend to be more affordable, also adding to the appeal of the suburbs.
However, it’s not just move-up and move-over buyers propelling markets like London, but first-time homebuyers as well. These real estate newcomers are expected to be the predominant driving force in London real estate throughout 2021. When examining the property types that first-time homebuyers are looking to purchase, the inclination is toward condos, townhouses and semi-detached homes due to the affordable price-point. Despite the monumental growth in the London Ontario market, home prices remain more affordable than in many of Ontario’s urban hubs, and as long as London continues to hold this reputation, hopeful homeowners will continue to set their sights upon the area!