London, Ontario: Residential Home Sales Decline
Residential home sales in London, Ontario have seen a significant decrease in November, reaching a historic low. The number of transactions is almost half of what they were during the peak of the pandemic three years ago. Local realtor and owner of RE/MAX Hallmark A Team real estate brokerage, Marcus Plowright, expects this trend to continue into the first quarter of 2024.
Reasons for the Decline
Several factors contribute to the decline in residential home sales. Homebuyers are feeling cautious due to inflation and high interest rates on mortgages. Additionally, pent-up demand and a year of continuous interest rate hikes have led to a decrease in consumer confidence in the real estate market.
On the other hand, the Bank of Canada has announced that it will maintain interest rates at a steady five percent into the new year. This decision comes after raising the rates to the current level in July, as Canada’s economy shows signs of cooling down.
Housing Inventory and Immigration
Median house prices in London last month were around $565,000. Plowright mentioned that there is a housing inventory of around 1,500 above that number, but only about 400 below the median.
Plowright and Dallas Martin, an agent with the Mortgage Firm in London, predict that if interest rates go down, house prices may increase. Another factor contributing to increased home prices is immigration levels. Martin said, “A lot of people are immigrating here from overseas, and they’re going to need places to live too, but we don’t have enough houses. Right now, even rent is super expensive, especially in Ontario and London specifically.”
Plowright emphasized the need for affordable rental housing, stating that affordability will not improve simply because interest rate reductions will be offset by house price increases.
What Can Be Done?
To address the housing crisis, policy makers should consider the increasing pace of immigration to London and the lack of available rental housing. The focus should be on creating more affordable rental housing options rather than constructing million-dollar houses. This would help in providing suitable living options for the growing population and ultimately contribute to the overall stability of the real estate market in London, Ontario.
Orginal article: Link To Article – provided by Kansas City Realtors