What is stalling London Ontario home sales and how you can take advantage of this market, be it a buyer or a seller!
BMO Capital Markets has been transparent about what is holding back the real estate market: the spread between what sellers want and what buyers are willing to pay.
At the bottom of this blog, I will articulate the best I can how this will affect you if:
You don’t care what the market does.
You are thinking of selling.
You are thinking of buying.
You are thinking of buying and selling.
Your home is for sale now.
Robert Kavcic, senior economist, describes it as a “wide bid-ask spread” that has prevented the market from clearing, leaving listings to languish. The only durable remedy is to close that gap.
There are three theoretical ways to achieve it.
The first is forced selling, which would require a deep recession, rising defaults, and job losses, a scenario neither imminent nor desirable.
The second is a substantial drop in mortgage rates into the low three-percent range, requiring a cut of roughly 100 basis points from current levels. That path is considered improbable in the near term.
The third is price reductions. BMO regards this as the most realistic outcome. RBC reaches a similar conclusion, noting that moderating prices in several regions have delivered the most remarkable affordability improvement in three years, encouraging more buyers to act.
Price Movements Are The True Lever Of Affordability
In the current interest rate environment, the arithmetic of affordability favours price declines over marginal rate cuts. Consider a $700,000 home with 20 per cent down, a 25-year amortization, and a five per cent mortgage rate. A five per cent drop in price reduces monthly payments by approximately $165. By comparison, a 25-basis-point rate cut on the same home saves about $58 per month.
The implication is straightforward: in the near term, further moderation in prices will have a greater influence on unlocking demand than incremental moves by the Bank of Canada.
Daniel Foch wrote: “September’s influx of new listings will test the market’s resolve. CREA (Canadian Real Estate Association) highlights this as a pivotal moment, when the balance between buyer demand and seller supply could either sustain recent gains or compel further price concessions.”
He further wrote: “The outcome matters because the recent lift in sales reflects opportunity rather than exuberance. With mortgage rates still high, price adjustments have been, and will remain, the most powerful lever for unlocking demand. In many major markets, values have eased just enough to restore a measure of affordability, drawing sidelined buyers back into the fold. “
How This Will Affect You
You Don’t Care What The Real Estate Market Does.
The real estate market affects everyone, from tenants and landlords to developers, as well as the commercial and industrial workforce, and affordability. Even if you have no intention of buying or selling, your wealth or poverty status is irrelevant. You don’t have to guess what drives interest rates, population growth or decline or demographics.
Reality is neutral.
You Are Thinking Of Selling.
You have two choices: price to sell or price to sit.
Thinking Of Buying.
The smartest move in a London, Ontario Buyer’s market is to buy now!
You Are Thinking Of Buying And Selling.
What you can buy for and sell for is the spread, a few synonyms: unfurl, broaden, expand, proliferation, advance and reach your net worth!
Your Home Is For Sale Now.
Your pricing strategy will make or break your results. And no matter the market—sellers, buyers, or balanced—every seller has just three choices:
Price At the Market
Price Behind the Market
Price Ahead of the Market
Wondering What To Do?
Sell, buy, stay, sit, guess?