Despite a nearly 30 per cent increase, the average selling price of London-area homes could jump another 15 per cent in 2022, an association representing realtors says.
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Despite a nearly 30 per cent increase, the average selling price of London-area homes could jump another 15 per cent in 2022, an association representing realtors says.
That prediction comes as home sales in the London-area market, which includes Strathroy, St. Thomas and parts of Middlesex and Elgin counties, topped 10,000 in 2021 for only the second time on record.
A total of 530 homes changed hands in December, bringing the year-end total to 10,964, the London St. Thomas Association of Realtors (LSTAR) said Thursday. The number of homes sold in December was the second highest for the month since sales started being tracked.
Strong sales came even as the average sale price of a home hit a record $ 707,000 in December, up nearly 28 per cent from a year ago.
“We weren’t surprised,” said LSTAR president Jack Lane. “We anticipated these volumes and that 2021 would be a record in many areas, and it certainly proved to be.”
The forces that shaped the 2021 housing market – high demand and low supply of homes, London’s affordability relative to the Greater Toronto Area, and out-of-town buyers – will continue to put pressure on the local market, Lane said.
But, he said he expects price growth to slow.
“Price increases over the last couple of years have been high, but we don’t expect that to continue at the same pace,” he said. “We do expect to see an increase of 10 to 15 per cent.”
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Expected increases by the Bank of Canada to interest rates, which have remained at historic-low levels throughout the pandemic, could dampen the market in 2022, said Richard Forbes, a senior economist with the Conference Board of Canada.
Though he said home prices in the London region won’t see the same growth as the previous two years, there’s no need “to raise the alarm bells.
“Demand is going to stay really strong,” Forbes said. “We’re not going to see, like, a major correction or anything like that in London or southern Ontario’s housing markets.”
That’s good news for people already in the market, but not so much for those still wanting to buy a home.
Already, high home prices are forcing some buyers away from the dream of buying a house and into other, more affordable segments of the market.
Though 74 per cent of all properties sold in 2021 were single-family homes, LSTAR logged record sales of townhouses (1,364) and apartment condominiums (1,009).
Inventory will be another key area to watch this year, Lane said.
Sellers spooked by the Omicron variant-fueled surge in COVID-19 cases pushed inventory to a historic low of 175 active listings last month.
When that surge subsides, Lane expects more homes to hit the market.
“We will see an increase in supply, but it’s not going to be dramatic, because of the constant demand,” he said.
DECEMBER AVERAGE PRICES
Average home selling prices reported by the London St. Thomas Association of Realtors
LSTAR: $ 707,219
London East : $ 559,723
London North: $ 867,374
London South: $ 713,252
St. Thomas: $ 656,923
Middlesex Center: $ 1.06 million