At the start of the pandemic and subsequent lockdowns, real estate was suspected to take a major hit through 2020. With layoffs and economic uncertainty looming over head, even the most liberal real estate professionals expected to see the market stall — or even crash.
What we have seen instead is a skyrocketing rise in demand and record breaking prices that have pushed the average cost of a London home to over $600k as of early 2021.
Pre-pandemic sales in London saw a steady rise over the past decade with an uptick in 2016 where sale prices began to notably climb — hitting over $400,000 for the first time in 2018. Driven away by increasing housing prices in the Greater Toronto Area, families made the journey towards smaller townships with larger, more affordable homes such as London and St. Thomas.
With out-of-town investors expanding the buying pool and shrinking the local housing supply, London saw home prices begin to climb as the market settled deep into a hot sellers’ market.
As COVID-19 lockdowns began to take effect in early 2020, real estate gurus predicted at least a market stalemate — and at worst a complete market crash. The market was expected to go from a record breaking spring to a flatline of activity with the uncertainty of the pandemic leaving buyers hesitant to make a large investment amidst employment woes and sellers hoping to wait for a market resurgence.
However, as of March 2021, we’ve seen sale prices skyrocket with no end in sight.
What’s behind the boom?
Well, surprisingly, upsizing.
City-dwellers are finding giving up their smaller GTA homes that once served their busy lives sufficiently in pre-quarantine life for homes with more stretching room in more suburban areas. With restrictions leaving more people homebound and remote-working becoming a mainstay in the past year, families are setting their sights on London and surrounding areas where larger homes are more affordably priced by comparison.
In a recent survey by Zoocasa, over 30% of pandemic buyers purchased a property in an area that they wouldn’t have considered prior to COVID-19 — with 70% of those respondents stating that they purchased a property further than they would have previously considered.
Along with space, easy access to amenities such as groceries and delivery services and transportation accommodations have also impacted buyer decisions.
What we’re seeing is a shift from high-contact, fast-paced city life to a quieter suburban sprawl that has put pressure on smaller cities with a limited housing supply for this new migrating population. With the help of historically low mortgage rates, buyers who can afford the move are looking to expand into suburban life.
Will it crash?
With limited supply of available houses to meet an increase in demand, we are seeing the natural result of a market squeeze — a raging sellers’ market.
Bidding wars have left home buyers writing heartfelt letters to sellers in a bid to tip the scales in favour of sentimentality over money, and effectively left some buyers feeling like they’ve been priced out of the market and unable to compete. Some have pushed their home buying plans back for the foreseeable future in the hopes of a market cooldown or crash tipping the scales back in their favour.
Our advice? Don’t hold your breath.
Buyers have been betting on the real estate bubble to pop well before COVID-19’s market surge, but the market has only gotten hotter and hotter.
From our perspective, even as the pandemic begins to come under control, the market will continue to feel its effects for years afterwards as Ontario begins to adjust to a new ‘normal.’ In a post-pandemic world, we suspect that in a best case scenario the market will remain in sellers’ territory but under more stable pricing as city-life becomes safer and quells some people's need for more space at home.
So, should I sell now?
So, the question still stands: should I sell now? We recommend it. Speculations state that as we transition away from work-from-home demand will slow and prices may see a small stabilization, so striking while the iron is hot can make sure you sell your home for its best price. Contact one of our realtors today to discuss your options.