Real estate sales in London, Ontario have seen full recovery since the economy slowed during the recession in 2007. 2015 proved to be a fantastic year, with the second highest level of sales in the history of the London and St. Thomas Association of Realtors. Overall, sales were up 9.9% over 2014. Average price overall currently stands at $264,435 (January 2015), which represents an increase of 4.1% since the previous year. Additional growth is expected for 2016 due to job growth, affordable carrying costs, and lower unemployment rates, as well as new migration to the city.
An increase in sale price is expected to land at approximately 4% for 2016, and growth is expected to be weighted more heavily in the first half of the year as sales increase and listings remain stable. We anticipate that listings will pick up in the second half of 2016 as a result of price growth earlier in the year. A balanced market is anticipated, though sellers are favored for lower-priced resale properties. Migration will also support housing demand in 2016 more than we have seen over the last 6 years. Data indicates that immigrants who moved to Canada in 2009/2010 will now consider entering the housing market. The 25-34 year old population is also expected to positively impact housing formation, and ultimately, the housing market.
We can expect mortgage rates to rise towards the end of 2016. This, along with rising home prices, will slow the market towards the end of the year. Housing demand is not expected to be impacted as qualifying income for a mortgage approval will remain low and available to many. A one-year mortgage rate is projected to be in the range of 3.0-3.8%, and a five-year mortgage is projected to be in the range of 4.7-6.0%.
Looking ahead to 2017, sales are forecasted to be higher than 2016 due to additional job growth and stability, as well as growth noted from 2016. CMHC anticipates a rise of 2.5% in sale price through 2017. We may see an increase of listings – additional supply – which will ease the demand, and explains less growth in pricing overall. Mortgage rates are expected to be 3.9-4.8% for a one-year term, and 5.1-6.5% for a five-year term.
Currently, inventory is 14% lower than it was at this time last year. Considering that growth is pegged to occur in the first half of the year, while interest rates remain low, opportunity knocks for those considering the sale of their home. Once supply increases, as we expect it will in the second half of the year, and mortgage rates rise, the temperature of the market may cool. Taking all this into account, statistics indicate that we will have another strong year in London’s real estate market! Call us to find out how you can capitalize on the wave of the market, and make the most of your real estate endeavors,