Its January 2013 and its time to look back over the last year in residential real estate in the London, Ontario, market. What did we see happen? The year started great. Through the end of May, 2594 homes changed hands, a 9.36% increase over the same period from the year before. Then the federal government changed the mortgage rules and for the remaining seven months of the year, with the exception of December (+2.53% year-over-year) and October (+4.12% year-over-year), the London area was down in terms of volume in 2012 from the same period (June through December) in 2011 by 6.25%.
The numbers look more grim when you look at each of the down months, month by month. June 2012 saw volume drop year-over-year 17.68%. July (-0.21%) and August (-5.30%) gave us hope that things might not be so bad. But September 2012 was off 14.82% and November 2102 saw the volume in the London market slide 15.63%. Remarkably prices rose a modest 0.85% in the first five months year-over-year and 0.92% for the last seven month year-over-year. Over all the strong first five months saved numbers for the year and the London, Ontario, residential market ended up showing a modest 0.77% increase in the number of units sold.
What does this mean going forward? For buyers it might mean that there could be some deals to be had in the first three months of the year in the lead up to the spring market as there may be some listings that have been sitting for a while on the market.
For sellers, you might have to come to grips with the reality that there is a lot of uncertaintly in the market as we open up 2013. The 7.5% gains in price that were made in 2010 and the 3.04% gains in price made in 2011 gave way to pretty much flat prices (+0.97%) in 2012. In previous years the number of units changing hands remained steady, but with demand sliding (some times in double digit percentages) in last seven months, sellers are going to have to be very conservative in their pricing expectations. Buyers are cautious, if they are there at all. They are looking for deals. The good news in all of this is that prices are holding so if you price your home right, it will sell, but you might not be making the price gains of a couple of years ago. Lower your expectations about what you will pocket from your sale, and you will do well.
The best news comes for those looking to move up in the market. While prices on you home might be the same as last year, they are also the same for that larger, more expensive home as well. And when you move up during a period of flat pricing, you are saving real dollars in your pocket. If your $200,000 home does not increase by 5% this year, that is $10,000 dollars you are not able to pocket. But the $350,000 home you have your eye on also did not increase by 5%, that is, $17,500. This means you could save $7,500 on the purchase of a larger home by buying in a flat market. Something to think about.