London's Housing Market: Sluggish Sales and Dropping Prices Define Mid-2024

London’s housing market kicked off the second half of the year as sluggishly as it ended the first. Recent figures from the London St. Thomas Association of Realtors (LSTAR) revealed that only 604 homes changed hands in July, 36 fewer than the same month last year.

The year-over-year sales decline across the region—which includes Strathroy, St. Thomas, and portions of Elgin and Middlesex counties—comes amid a more than $16,000 drop in the average resale price. July’s average resale price hit $654,593, down from June’s $671,309.

The local market, previously one of the most heated in the country, is feeling the pressure of higher interest rates. This has shifted the dynamics from a seller's market, where properties often sold above asking price, to a more balanced one.

Kathy Amess, chair of the local real estate association, commented on the current state of the market, mentioning that the perceived weakness is more about adjusting to a balanced market. 'I’m not really concerned that the market is in a poor position,' she said. 'We’re just in a more balanced position, and that’s not somewhere we’re used to because of the recent high periods.'

July’s figures illustrate the trend: 4,443 homes have sold locally in 2024 compared to 4,416 at this point in 2023. Despite the lower sales, the number of active listings increased, with 1,531 homes on the market in July, nearly 200 more than last year. According to Amess, this indicates seller confidence.

Middlesex Centre is the standout, remaining the only area where average home prices top $1 million. Conversely, east London offers the most affordable options, with an average price of $495,242, closely followed by St. Thomas ($575,525) and Strathroy-Caradoc ($637,700).

The Bank of Canada's second interest rate cut this year in June brought the rate down to 4.5%, sparking hope but leaving analysts predicting further cuts are needed to rejuvenate the Canadian housing market.

Switching gears slightly, let’s look at the broader market overview for June 2024 from WOWA.ca. Average home prices in London saw a minor uptick of 1.6% from last month, now sitting at $671,309—a 0.7% year-over-year decrease. The benchmark price of homes was $617,600, 2% lower than last June but 1.7% higher than in May 2024.

Sales dropped by 9% year-over-year, although 6.8% more new listings cropped up this June compared to last year, helping to balance the market. In spite of recent rate cuts, mortgage rates remain higher than in previous years, impacting overall affordability.

Despite London’s price gains over the last five years—a 63% increase—it's still more affordable compared to surrounding markets like Toronto, where average prices exceed $1 million. London remains a relatively attractive option in Southwestern Ontario.

Keep an eye on these trends as we move forward. The London housing market is finding its new normal, and adjustments in interest rates and market conditions will shape its future. Stay tuned for more updates and insights as the year progresses.