London, Ont.'s frenetic housing market appears to be cooling off
Real estate agents say there are fewer bidding wars, more inventory, in line with other markets in Canada
Real estate agents in London, Ont., say the city's frenetic housing market is starting to show signs of cooling off — with fewer bidding wars and more available inventory.
Last month, the London St Thomas Association of Realtors (LSTAR) said 1,835 new homes were posted to the province's Multiple Listings Service (MLS), the largest such number ever recorded in the region for the month.
At the same time, 844 homes were sold, bringing the sales-to-listings ratio down to 46 per cent, something LSTAR said hasn't been seen in this area in a decade.
It's a sign the London market is beginning to return to balance and a far cry from the beginning of the year, according to Durgesh Tiwari, a real estate agent who's been selling homes in the city for seven years.
Home prices falling slowly since February
"In January, February and March, there were only 300 listings," said Tiwari. "People were panicking that, 'Oh my goodness, there are no houses to buy,' and people just paid $200,000 sometimes extra for a house, which is not healthy for any market."
And London isn't alone in experiencing cooling home markets, as sales volumes and listings in other parts of Canada have fallen as interest rates have started to rise.
Tiwari said that for new buyers who can afford to wait and plan, it's a good thing. For investors who were hoping for a quick flip, or who bought when the market peaked, rising interest rates might be a harbinger of bad things to come.
Now I think we're even seeing a lot of homes list at the price and the price is the price.- Mark Vieira, real estate agent
"There are people who have bought houses without assessing the saturation. They pour money into it thinking it's going to grow more," he said. "The market is shifting downwards and everybody is afraid."
Prices have been slowly falling since February. Back then, the average home in the London region sold for $825,221, according to LSTAR. In May, the average price was $762,397 — a decline of eight per cent over three months.
Less competition and fewer bidding wars
"We're seeing prices come down from the first quarter," said real estate agent Mark Vieira, who noted sales have slowed to a much more normal rate.
"We're seeing a shift of homes selling at an average of seven days on market. Now we're pushing above that rate."
Bidding wars are also becoming increasingly rare, according to Vieira, who said slower sales have meant less competition for buyers who faced fierce competition up until a few months ago.
"We were seeing such low inventory and buyers were competing against multiple offers and had no exact idea of where their figure should be and now I think we're even seeing a lot of homes list at the price and the price is the price," he said. "A bit of the guessing game is gone."
Ultimately Vieira said, he believes the slowing of the market is a good thing. It will give buyers more flexibility and choice and, with the right planning, will allow first-time buyers to get a toehold in a market that was becoming increasingly inaccessible with every passing month.
"With the increase in supply, we're seeing people make more moves."