What a Crazy Year! 2017 London Ontario Real Estate Numbers Are In
2017 has come and gone, a year where the London Ontario real estate market went on a wild ride. The big question as we begin 2018: will this wild ride continue into the new year?
We closed out 2016 with solid numbers. The average price for a detached home was $315,000. For a condominium that number was just under $198,000. Overall, combining both condos and detached dwellings together, the average price for a single family dwelling was $283,500. Price growth was just under 7% for the year. There were signs, though, that something big was brewing. Throughout the late summer and fall we began to notice that homes were beginning to sell quicker and quicker, sometimes within hours of being posted for sale. As a buyer, you often had to be first to see the house and come with an offer in hand, ready to be signed on the spot.
This busyness continued through the winter during a time when things are usually quiet in the real estate market. In January 2017 we started to see listing agents advising new tactics to deal with the overactive level of activity. Increasingly, more and more listings were being posted with “offer hold back dates.” A listing would hit the market on Monday, but the sellers would not deal with offers until Sunday. This allowed anyone who wanted to see the property a chance to have a look and make a decision. Speed was not longer the decisive factor. Instead, money ruled the day. When things were at their wildest in April and May, 75% of homes were selling for over asking price. The average sale price for the entire city in every neighbourhood and category was $35,000 over the list price.
It was tough for everyone to get a handle on what properties were worth. Prices kept rising. Every time list prices went up, the sale prices would increase too. A combination of low interest rates, low unemployment rates in the London region and out of region buyers entering the market to compete with local buyers created the conditions for a wild ride. Everyone was wondering where prices would settle out when this mania exhausted itself? How much is too much to pay? Some buyers will eventually discover they paid too much for their home.
Prices fluctuate throughout the year, even in a busy market. They do not rise or fall steadily. The average home price is typically at its lowest in the winter months of December,January, and February as well as the summer months of July and August. Prices typically reach their peak in the spring during April and May. There is usually a second bump in prices during the fall months of October and November, but not to the levels seen during the spring. Things were no different in 2017. The average price of a detached home when we started the year was $315,000. By April and May that number was $397,000. Prices did slip back again over the summer as the price of the average detached home fell to $354,000 by September. The fall and early winter has continued to be busy. Prices climbed throughout the fall and even through the end of December with the month’s average for a detached home sitting right at $375,000. This late fall strength in the market seems to indicate that the energy driving the London market has not quite dissipated yet.
For the year 2017 as a whole, the average price of a detached through all of its ups and downs ended up at $376,149 almost exactly in line with the numbers for December. This may be a sign that the market is finding a comfortable value for the moment, with buyers, sellers and their agents having a much better grasp now of what a home is worth a this moment in time. That $376,149 average represents a 19.36% increase for the year. Condominium prices saw a similar rise. The average for the year was $232,258, an increase of 17.42%. On the whole, combining both detached houses and condominium dwellings, the overall average home price is $335,560, an increase of 18.29%
By the time the spring market of 2018 is done we will almost certainly have a much better of idea of how much strength is left in London market and what the new normal will be for home prices in the city. I doubt it will be as busy as this past year, but all the signs are there that prices will continue to rise, at least through the spring.