Will the housing market crash in London Ontario? Is there a real estate bubble in London Ontario?  For the last few months, economists, the heads of three of Canada’s major banks (BMO, CIBC & RBC) agreed that the market is reaching its peak and though they do not foresee a crash, they feel that prices are likely to decrease this year and perhaps decrease for 2-3 years. (Some predict 25% across Canada)

Some are even predicting gloomier thoughts, such as a real estate bubble ready to burst. That may be so for cities like Toronto, Montreal, Calgary or Vancouver where new home and condo construction is at an all time high.

I don’t think we will see this decrease in prices in London Ontario for the following reasons:

•         The average selling price for a home in Canada at December 31, 2011 was $347, 801 while in London the average price was $244,430 which shows that London has not seen the influx of investors, speculators or the herd mentality which believe if prices are rising, that they should jump in and buy a home so that they do not miss out and benefit from those soaring prices. So as a result, housing is perceived as an asset that can only rise in value and the herd just keeps on going in debt and piles it on.
•          It is believed that median house prices should be no more than three times larger than the median household income. Today, prices stand at 4.6 times the median income across the major cities in Canada yet London is a little under that 3 times the median income level!
•         Interest rates are at their all time low which usually means a real boom for home buyers but with debt ratios for the average Canadian rising, inflation being curbed to a minimum and tighter lending rules, London historically has stayed the course with real estate prices being less than the Canadian median.
•         I am seeing more and more Baby Boomers moving to London because of lower housing costs, London’s great medical facilities, the resurgence of downtown London, the multitude of recreational facilities, golf courses and situated between two of the Great Lakes, Lake Huron and Lake Erie. These folks have cash or little debt, are leaving the larger centres and are cashing out on the rising prices in their communities.

   Is London Ontario immune to the rest of Canada? Of course not but the influx of middle class newcomers to London with money will keep our real estate market stable for years. By no means should we ignore the global economy either but as demographics change, a house or a condo changes from bricks and mortar to a home.

 London Real Estate Market Stable in 2011

  2011 proved a solid year for real estate sales in the London and St.Thomas area with 8,048 homes exchanging hands over its twelve-month course -- just 1% down from the previous year.

   “It was a little slow coming out of the gate, but in the end we finished strong, despite concern over the extent to which global economic worries would impact us locally,” says the LSTAR President for 2011.

   “December delivered a strong performance as well, with 384 sales, just 0.8% down from the previous December. “We are especially pleased by how well St. Thomas did in 2011,” its sales were up 3% over last year’s and its average price rose to $189,413, up 3.7%.”

    The average price for a detached home in LSTAR’s jurisdiction (London St.Thomas Association of Realtors) at Year End stands at $244,430, up 5.3% from January 2011. The average price for a condo stands at $179,560 year end, down 3.4% from January 2011.

   The following table, based on data taken from CREA’s National MLS® Report for November 2011 (the latest information available), demonstrates how homes in LSTAR’s jurisdiction continue to maintain their affordability compared to other major Ontario and Canadian centres.

The London and St. Thomas Association of REALTORS® (LSTAR) is one of Canada’s fifteen largest real estate associations, representing 1,500 REALTORS® working in Middlesex and Elgin Counties, a trading area of 500,000 residents.

 LSTAR adheres to a Quality of Life philosophy, supporting growth that fosters economic vitality, provides housing opportunities, respects the environment and builds good communities and safe neighbourhoods and is a proud participant in the REALTORS Care Foundation’s Every REALTOR™ Campaign.

 As members of the Canadian Real Estate Association, LSTAR members may use the REALTOR® trademark, which identifies them as real estate professionals who subscribe to a strict code of ethics.

 The Association operates the local Multiple Listing Service® (MLS®) and provides ongoing professional education courses for its members. 

 The other day on the news there was a report about real estate and the predictions for 2012 and the rising prices as well how in some cities in Canada the real estate market is booming while others remain  stable or are declining.

For those of you who know me you know I like to make decisions based on facts and as history repeats itself, I hope the following graphs will help you understand and see that the real estate market for houses and condos in London Ontario is stable and there is no reason why 2012 will be any different.

                                                                   Units Sold To Units Listed Last 12 Months

                                        Average Residential  Prices Last 3 Years in London Ontario

                              Average Monthly Units Sold in london Ontario Last 3 Years

     As you can see, pretty stable and there are neighbourhoods in London that are sought after and a few that you may want to think twice about. The same goes for condos in London , some complexes or buildings are a great investment while others may show a minimal increase at all over the years.

I am always asked when is the best time to list a home in London Ontario or how is real estate doing and what are the average prices. I also hear most excuses why homes do not sell or the rationalization of why some homes sell quicker than others and some, for more money.

Understanding the local market and facing the reality of the local market can be a double edged sword for many London home owners. Selling your home is not a lottery, or a gosh by golly whim, or just putting up a sign on your lawn or pricing your home because one of your co-workers and one of your friends told you your home is worth ‘x’, because they sold their home last year and know of a friend of a second cousin who has a friend who used to sell real estate part time. (whew!)

Below is a 3 year chart and graph of ACTUAL home sales in London Ontario and as history has a way of repeating itself, what is in store for 2012?

I cannot predict the future as I prefer to live in the moment and my experience reasons ;that a home will sell based on price, location and the amount of listings there are that compete with your home. Mr. and Mrs. Buyer decide that, not you.

    Home sales in London Ontario overall in September 2011 were up 19.2% over the previous year, with 589 detached homes and 113 condos exchanging hands.

    As of September 30, 2011 , year-to-date sales are down only a very modest 0.8% compared to this time last year.

  Listings were also up 7.7% in September, and year-to-date listings are up 9% over last year.

  The average sale price for a detached home year-to-date now stands at $244,307, 5.3% up from January 2011, while the average price for a condo was $182,758, down 3.4% up from January 2011.

   Year-to-date the average price for a home (including condo sales) in  is $232,511, 4% up from January 2011.
 

The following table, based on data taken from CREA’s National MLS® Report for August 2011 (the latest information available), demonstrates how homes in LSTAR’s (London & St.Thomas Association of Realtors) jurisdiction continue to maintain their affordability compared to other major Ontario and Canadian centres.

Metropolitan Centre Average House Price
Vancouver                         $661,306
Toronto                             $462,612
Victoria                             $457,483
Calgary                              $418,281

Hamilton-Burlington         $336,805
Edmonton                         $329,867
Ottawa                             $337,315
Kitchener-Waterloo         $308,595
Regina                              $279,288
Saskatoon                        $299,924
St. Catharines                 $250,220
Halifax-Dartmouth           $252,278
Newfoundland & Labrador $234,339
London St. Thomas            $233,578*

A breakdown of London and area sales

House Style Units       Sold                Average Price
2 storey                           163                $323,693
Bungalow                         141                $181,777
Ranch                                82                $282,799
Townhouse Condo             59                $152,039

What does all this mean?

London and St. Thomas historically has been a balanced market as the above numbers show and we do not experience the peaks & valleys that other major cities have or are experiencing.

That being said, properties in London still need to be marketed properly and correctly to sell; and all buyers should be aware of neighbourhood quirks and positives.

For a detailed breakdown of a London neighbourhood or property style, you now know whom you can turn to.

 Does knowing what house prices have been like over the last 3 years in London and South West Ontario do any good?

If you are planning on moving to London Ontario, I think it does. If you are thinking of listing your home in London Ontario I think it does. If you are a real estate investor, I think it does.

London and area real estate has been quite stable the last 3 years as the chart below shows and we do not get the large price swings that Vancouver, Calgary, Toronto or Montreal is seeing.

Again, London is proving to have one of the best real estate values in Canada.

According to statistics¹ released today by The Canadian Real Estate Association (CREA), national resale housing activity was stable on a month-to-month basis in July following an uptick in June.

Highlights:
• Sales activity was stable from June to July, but posted a big year-over-year gain due to weakened demand in July 2010.
• Year-to-date sales continue to run in line with the ten-year average.
• The number of newly listed homes inched up by less than one per cent from June to July.
• The national housing market remains firmly entrenched in balanced territory.
• The national average price posted the largest year-over-year gain since April 2010, but was below where it stood in June.
• Upward skewing of the national average price is diminishing due to fewer expensive sales and a declining share of national activity in Vancouver and Toronto.

National home sales activity held steady in July 2011 compared to the previous month, with just over half of local markets posting month-over-month gains.

To read the full report, click here 

Changes in population from migration and immigration:

A total of 31,805 people were added to the province’s population as a result of net inter-provincial migration and international immigration in the third quarter of 2010. Notably, it was the first time since the beginning of 2003 that Ontario has recorded a net gain from inter-provincial migration.

Some 2,083 more people moved to Ontario than moved away from the province to elsewhere in Canada in the third quarter. This was the first net gain in more than seven years.

For graphs and a detailed report go here.

International immigration added 29,722 people to the province’s population in the third quarter of 2010, up six per cent from the same period in 2009.