Special Report - What is happening in the crazy Sellers Market???

Special Report

What is happening in this crazy Sellers Market???

Without a doubt you’ve heard of the HOT Real Estate market in London, St. Thomas and surrounding areas under the boundaries of the London & St. Thomas Association of Realtors (LSTAR) which basically covers everything in the counties of Elgin & Middlesex.

This is my take on what is happening and the factors contributing to a seller’s market never before seen.

Well the cats out of the bag! LSTAR has been promoting for some time now that we are the best kept secret in all of Canada for a city our size and people are really starting to take notice…

Inventory is an issue! The absorption rate, the amount of properties available to buy in relationship to demand,  in a balanced market we would normally see 3 months of inventory and in a buyer’s market there would be 6 months plus of inventory.  In London we have 1.5 weeks’ worth of inventory!! The only reason we are seeing that long is that most Realtors myself included, are holding off offers for 5 to 7 days as we need that time to get all the prospective buyers through so as to maximize our seller clients homes to get the max possible for them.

Sellers are getting multiple offers on their properties and one in particular that I was involved in had 30 offers! Because of this buying frenzy sellers are getting tens of thousands of dollars more than asking and in one extreme case a property in London fetched $230,000 more than their asking price!! Unbelievable I know, however it’s true. 

Canadian Mortgage & Housing Corporation (CMHC) is indicating there are 3 factors driving our local market.

-One third of the buyers are just local people going about their daily lives; getting married, getting divorced, moving up, moving down, moving on to that condo apartment in the sky….lol etc.

-The other one third is immigration, people immigrating to Canada and choosing London to live.

The last third is migration, people moving from  Toronto and area and even people  moving back from Alberta where oil & gas industries have suffered the last few years.

The bigger driving force seems to be migration or the Toronto factor. Prices there are through the roof and have showed no signs of slowing down. They are unaffordable for a lot of people. Regardless of what government does to try to cool it.  The leading edge of the Baby Boomers are retiring and I have seen buyers from there selling their homes north of a million and coming to our area and buying brand new one floor homes for under $400,000 and investing the rest.  And why not London and area? We are centrally located between Toronto and Detroit and offer some of the best health care in all of Canada. It has big city amenities with a small town feel, everything is here and they don’t have to battle the traffic. I know London traffic…. but it’s all about perspective!!

There is also Toronto people buying property for investment because of affordability and even speculating that property values are going to increase even more.

 Lastly the two questions I’m asked are, “what is my property worth?” and “can this market last?”

As for the value question, my answer is “I don’t know” … helpful huh! All we can do is look at the very most recent sales and find that starting price point, hold off offers while we market the property and get the most buyers through as possible. Then let that auction effect take it to the high water mark through the multiple offer scenarios we have created (coincidentally a bad time to try to sell yourself privately because you won’t know just how much money you are leaving on the table!)

The last question of how long this will last… I don’t know as my crystal ball is in the shop!  What I do know is that interest rates are likely to stay at historical lows for the foreseeable future and the government will be reluctant to upset the Real Estate market as the economy remains a bit fragile especially with all the Trump treats as of late.  London prices have room to grow from the point of being historically low for a long time.  We will remain attractive to the leading edge of Baby Boomers as a place to retire.

 In the 80’s we experienced the last Sellers Market where prices took off.  I remember then selling a ranch home in east London and at that time and we saw the price of a home go from $50,000 to a high of $120,000 and even though we had a correction in the early 90’s we didn’t see the prices drop back to 50K.  They did retreat to about $100,000 and within a few years exceeded the $120,000 mark and today sell in the high $280’s plus. So have no fear and don’t lament that fact like I do, that I should have bought more income property over the years!!!