The COVID-19 public health crisis was an unprecedented event, creating a great deal of confusion and a tremendous amount of uncertainty. From a surge in unemployment to a stock market crash and government-imposed lockdown measures, it was a lot to endure in such a short period. When Ontario was at the height of the virus outbreak, it was hard to predict when the market and economy would begin their return to normal conditions. But summer has arrived, and the rebound is unfolding.
Nearly every industry across the province of Ontario has endured economic pain, either temporary or persistent. The real estate industry has done an incredible job of adapting to changing market conditions, from leveraging the power of technology to adopting necessary public health protocols. The efforts of offices and Realtors have ensured that the sector held its own during and after the downturn. As a result, many cities across Ontario are reporting a significant boost in sales. One of them is London. This particular housing market is booming, and it seems not even a public health crisis could curtail its momentum.
How well is the London real estate market faring in the post-coronavirus economy? Let’s explore.
Ontario Housing Market: London Real Estate Snapshot
In London, home sales are not rebounding; they are setting records. Last month was the second-strongest June since the local real estate association began tracking data in 1978.
In June, home sales surged 13.8%, compared to the same time a year ago, according to recent data from the London and St. Thomas Association of Realtors (LSTAR). Nearly 1,200 homes changed hands. Some parts of the city experienced their best June ever, while others are either at or above recent averages.
LSTAR figures also show that average home prices advanced 17.8% year-over-year in June. Although the number of listings in June increased 3.4% year over year, June reported just 1.3 months of inventory – the lowest level in the last 10 years.
“These figures might sound incredible, with all the social distancing rules and the open house prohibition in place. But, in reality, they show how desirable the properties in our area are and how quickly our Members embraced new technologies to serve their clients,” said Blair Campbell, president of LSTAR, in a statement.
Campbell also told The London Free Press: “It’s still a tough market for buyers — great one if you are selling.”
Just how much of a seller’s market is London right now? Consider this figure: the sales-to-new listings ratio is 78.5%. London continues to be one of the hottest housing markets in both the province and in the country, and its resilience during this pandemic is evidence of that.
London: the Country’s Best-Kept Secret?
For about 30 years, the London housing market had to forge ahead without any significant momentum. In the 1980s, there was a boom in development that attracted new families in search of substantially sized homes that were not available closer to Toronto. The population grew at the time, going from 270,000 in 1987 to 383,000 today. Then something changed.
For the first time in the city’s history, the average house price surpassed the $400,000 threshold. The considerable demand, mostly from outsiders, drove up prices in this market.
London has an advantage that the major cities do not: affordable housing. Reports have repeatedly found that London is not only one of the best places to live, but it also ranks high on the affordability scale.
Although the rise in housing prices could potentially take a breather due to the Canada Mortgage and Housing Corporation’s (CMHC) new mortgage rules, London will continue to be one of the nation’s top destinations. One of the primary factors for London’s success has been its transition from a small Ontario town to a tech hub.
Overall, London has been one of Canada’s best-kept secrets for a long time, but more real estate hopefuls are beginning to discover the city as an attractive destination. London has long been considered one of the best places to raise a family due to its vast number of city parks. The economy is also faring well, with an unemployment rate that is currently lower than the national average, thanks in part to the growth of both tech giants and startups planting roots within the London city core. Many would argue that London is where the nation’s innovation and ingenuity emanates.
London was Canada’s best-kept secret, but now that the secret is out, the city needs to contend with an enormous influx of residents, as well as employees.
The Best Is Yet to Come?
The CMHC recently projected that the Canadian housing market would slump as much as 18 per cent over the next 12 to 18 months. Many have dismissed this forecast, arguing that the fundamentals are strong, and sales and pricing activity are already on the rebound. With the Bank of Canada (BoC) keeping interest rates at a historic low and the real estate industry ready to adapt to market changes, it can be hard to believe that a steep decline in sales, prices and activity is coming. London is no different, and the city is primed to continue to show strong signs of recovery as we progress through the next few hot months of summer.