Are you looking to buy or sell a home in London Ontario? If so, you might want to know the real estate market trends for 2023. In this blog post, we will explore some of the factors that affect the housing market in London and what to expect in the next year.
The London Ontario real estate market has been correcting since 2022, when home prices hit record highs. High demand and low supply drove prices up by 64% in two years. But since March 2022, prices have fallen by nearly 20%, as interest rates, mortgage rules, and listings have slowed down the market.
As of May 2023, the average home price in London Ontario was $664,274, a 10.4% drop from May 2022. The median home price was $625,000, an 8.8% drop from last year. The number of sales was 846, the same as May 2022 but a 17% increase from April 2023. The number of new listings was 1,397, a 24% drop from May 2022 but a 45% increase from April 2023.
The sales-to-new-listings ratio (SLNR) for London Ontario was 61% in May 2023, showing that the market is still a seller’s market but less intense than before. The sale-to-list price ratio was 100.5%, meaning that homes are selling almost at the listed price.
What are the factors that affect the London Ontario real estate market in 2023?
There are many factors that influence the housing market in London Ontario in 2023, both on the demand and supply side.
Some of the demand factors are:
- Interest rates: The Bank of Canada has raised its benchmark interest rate seven times in 2022 to fight inflation. This makes borrowing more expensive for home buyers. The bank may raise rates again in 2023 but at a slower pace.
- Mortgage rules: The federal government has tightened the mortgage stress test for uninsured borrowers in June 2022. They have to qualify at a higher interest rate than before. This reduces their borrowing capacity and makes it harder to enter the market.
- Affordability: The fast rise in home prices in London Ontario has made homeownership less affordable for many buyers. According to RBC Economics, it would take more than half of a typical household’s income to cover the costs of owning a home in London Ontario.
- Consumer confidence: The COVID-19 pandemic and its economic impact have also affected consumer confidence and sentiment towards buying a home. Some buyers may be reluctant to make a big purchase or take on more debt in an unstable environment.
Some of the supply factors are:
- Inventory: The number of homes for sale in London Ontario has increased since last year, giving buyers more options and reducing bidding wars and price pressure. But inventory levels are still low compared to historical norms and demand is still strong, especially for single-family homes and low-rise condos.
- Construction: The construction activity in London Ontario has been affected by labour shortages, supply chain disruptions, rising costs, and delays due to the pandemic. This has limited the supply of new homes and condos in the market and increased their prices.
- Migration: London Ontario has been attracting more people from other parts of Ontario and Canada due to its affordability, quality of life, and economic opportunities. This has increased the demand for housing in the city and supported its population growth.
What are the predictions for the London Ontario real estate market in 2023?
The outlook for the London Ontario real estate market in 2023 is mixed, depending on who you ask. Some experts predict that prices will keep falling until they reach a bottom in the second half of the year, while others expect prices to stabilize or even rebound slightly.
According to TD Economics, prices in London Ontario will fall by another 5% by mid-2023 before recovering modestly by the end of the year. They cite higher interest rates, lower income growth, and weaker demand as reasons for the price correction.
According to Desjardins Economics, prices in London Ontario will fall by 3% in 2023, as the market adjusts to higher interest rates and tighter mortgage rules. They expect sales to rise by 5% and new listings to rise by 10%, resulting in a more balanced market.
According to WOWA.ca, prices in London Ontario will fall by 2.8% in 2023, as the market remains in a seller’s territory but with less intensity than before. They forecast sales to rise by 7% and new listings to rise by 15%, improving the market conditions for buyers.
What are the opportunities and challenges for buyers and sellers in the London Ontario real estate market in 2023?
For buyers, the London Ontario real estate market in 2023 offers some opportunities and challenges.
The opportunities are:
- Lower prices: Buyers can take advantage of lower home prices in London Ontario and negotiate better deals with sellers. They can also benefit from more inventory and less competition in the market.
- More choice: Buyers can have more options and flexibility in choosing a home that suits their needs and preferences. They can also explore different neighbourhoods and property types in London Ontario.
- Long-term investment: Buyers can view buying a home in London Ontario as a long-term investment that will appreciate over time. They can also enjoy the benefits of homeownership, such as stability, security, and equity.
The challenges are:
- Higher interest rates: Buyers will have to pay more interest on their mortgages and qualify at a higher rate than before. This will reduce their purchasing power and affordability.
- Mortgage rules: Buyers will have to meet stricter criteria to get approved for a mortgage, especially if they are uninsured borrowers. This will limit their options and flexibility.
- Market uncertainty: Buyers will have to deal with the uncertainty and volatility of the market and the economy. They will have to weigh the risks and rewards of buying a home in London Ontario in 2023.
For sellers, the London Ontario real estate market in 2023 also offers some opportunities and challenges.
The opportunities are:
- Strong demand: Sellers can still benefit from strong demand for housing in London Ontario, especially for single-family homes and low-rise condos. They can also leverage the attractiveness of the city as a destination for migrants from other regions.
- Seller’s market: Sellers can still enjoy a seller’s market in London Ontario, although less intense than before. They can still expect to sell their homes quickly and close to the asking price.
- Equity growth: Sellers can still capitalize on the equity growth they have accumulated over the past few years. They can use their equity to upgrade, downsize, or invest in other properties.
The challenges are:
- Lower prices: Sellers will have to accept lower prices for their homes than last year and adjust their expectations accordingly. They will also have to compete with more listings and less urgency in the market.
- Marketing strategy: Sellers will have to be more strategic and creative in marketing their homes to attract buyers. They will have to highlight the features and benefits of their homes and price them competitively.
- Timing: Sellers will have to be careful about timing their sale and consider their personal and financial goals. They will have to decide whether to sell now or wait for better market conditions.
The London Ontario real estate market is correcting after reaching record highs in 2022. Prices have dropped by nearly 20% since then, as interest rates, mortgage rules, and listings have slowed down the market. But demand is still strong, especially for single-family homes and low-rise condos, and inventory levels are still low compared to historical norms.
The outlook for 2023 is mixed, depending on who you ask. Some experts predict that prices will keep falling until they reach a bottom in the second half of the year, while others expect prices to stabilize or even rebound slightly.
Buyers and sellers both face opportunities and challenges in the London Ontario real estate market in 2023. Buyers can take advantage of lower prices, more choice, and long-term investment potential, but they also have to deal with higher interest rates, stricter mortgage rules, and market uncertainty. Sellers can still benefit from strong demand, a seller’s market, and equity growth, but they also have to accept lower prices, compete with more listings, and be strategic about timing their sale.
If you are interested in buying or selling a home in London Ontario in 2023, you should consult with a local real estate agent who can help you navigate the market trends and find the best opportunities for you.