The average home in the London region is suddenly worth $607K. Here's why:
From December 2020 to January 2021 average prices rose from $555K to $607K
It was news that made a lot of people give their head a shake.
The price of an average home in the London region surpassed $600,000 in the first month of 2021, climbing almost $52,000 from $555,324 in December 2020 to $607,431 in January 2021, according to the most recent data from the London St Thomas Association of Realtors (LSTAR).
Between those two months, 547 homes were bought and sold, which LSTAR says is the highest number ever recorded for the month of January in the last 43 years.
While the number of homes sold in the last month might have broke a four decades-old record, the period between January and December is still one of the slowest times in real estate – even when the market is booming.
"First off you're dealing with December to January, so in those months, they're typically the low period for sales activity," said Anthony Passarelli, a senior market analyst with the Canada Mortgage Housing Corporation.
In fact, inventory is low in the London region that it would take less than a month to liquidate the current inventory of homes for sale, LSTAR said in its latest news release.
With inventories so low and the volume of sales lower than the rest of the year, the period is more prone to reflecting shocks, especially when people are buying at the upper end of the market, which Passarelli said is currently happening.
"If you had a few homes that sold in the million-plus category, that drags that average number up a lot when there's not a large number of sales in that month.
"It's more subject to being affected to purchases on the very high end of the sale."
Passarelli said while the market has been hot since the relaxing of pandemic restrictions last spring, it's only because people are looking to buy homes in London, not because people are willing to sell them.
"The market is under supplied and the demand is high and the price is going to grow quite a bit when that occurs. So it's a combination of the low supply and high demand and the demand is targeting the higher end of the market right now, so all of those factors bring up the average price sharply."