It’s no secret that across the country, various Canadian cities have been experiencing heated housing market activity over the past six months. Rising prices that were typically only seen in larger, metropolitan areas such as Toronto, Vancouver and Montreal, are now beginning to spill over into Canada’s smaller and medium-sized markets, including the London real estate market.
Notably, London and St. Thomas, Ontario have both experienced a surge in prices as of late. Coming off a fairly hot 2020 market – largely attributed to shifting consumer behaviour during the pandemic and record low interest rates – both London and St. Thomas have continued to experience strong sales as the spring continues. “We’ve experienced a very robust start to the first quarter of 2021, with the seventh consecutive month of record sales,” said LSTAR 2021 President Jack Lane.
These strong sales figures spilled over into the month of April, and are expected to continue on this trajectory toward the end of spring and into the summer. In fact, closing out April, year-to-date sales in the London and St. Thomas area were up by more than 57%. “We are encouraged by the strong sales numbers, as the spring market ramps up,” says Lane. “Year-to-date sales are also performing ahead of 2020. At the end of April, there have been 3,918 sales, up more than 57% over the same period last year.” With 1,231 homes changing hands in the month of April alone, the rest of the spring season is expected to be red hot for London real estate.
Lack of Inventory a Leading Factor in London Real Estate Market
A key factor in the trend of rising prices in the London housing market is lack of inventory. When low inventory combines with extremely high demand, housing prices increase at a drastic rate, and homes often sell well above their listing prices – classic seller’s market conditions. “Another area we monitor is inventory, which shows how long it would take to liquidate existing inventories at the current rate of sales activity,” Lane said. “At the end of March, there were 0.4 months of inventory, lower than the 0.6 months of inventory reported at the end of February. Out of the five main areas, St. Thomas and Strathroy had the lowest housing supply, with only 0.3 months of inventory. Elgin had the highest supply with 0.7 months.”
Average residential price in the London and St. Thomas area was up by approximately 41% in the first quarter of 2021 when compared to that of 2020. In addition, the London and St. Thomas Association of REALTORS® (LSTAR) reported that residential sales broke records for the highest number of sales ever in a first quarter. The first quarter of 2021 saw 2,671 units sold, which is an increase of over 30% when compared to the first quarter of 2020.
While housing prices in London and St. Thomas have dramatically increased over the last 12 months, they are still well below the national average. Even with a drastic 41% increase in price, the median sale price in the area sits at only $650,000. This is $66,828 below the national median sale price of a record $716,828.
What’s on the Horizon for the London, Ontario Housing Market?
With the current London real estate market experiencing unprecedented demand – which is being driven from the high volume of homebuyers leaving the GTA in favour of smaller cities, low interest rates, and strict government regulations on new residential developments – it is expected that the London and St. Thomas real estate market will continue to boil hot. All of these factors have led to record-breaking prices, and an extremely tight turn-around time for homes on the market.
As London and St. Thomas’ real estate market continues to break records, the upside is that it will be a boon to the economy in the aftermath of the coronavirus pandemic. “The record March home sales could translate into more than $94 million back into the local economy within the next few years,” Lane said. “The business of real estate is a huge contributor to getting the economy back on track, as all sectors continue to manage the impacts of the COVID-19 pandemic.”
It is expected that these factors will continue to play a role in strengthening this local housing market well into the summer. As the outdoor temperatures soar across Southern Ontario, real estate conditions will likely follow in this upward trajectory.