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!!
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!!!
