COVID-19 hasn’t pushed prices down as many look to upsize or renovate
Take a look at London-area real estate prices and you’d be hard-pressed to find evidence that Ontario continues to struggle with the economic fallout of a deadly pandemic.
The London-St. Thomas Association of Realtors (LSTAR) released numbers this week showing that $500,000 is now the average price for a London-area home.
Average sale prices for the region are up 22 per cent when compared to August 2019, with south London and St. Thomas seeing the biggest increases.
CBC News spoke to a handful of people in the real estate and home renovation business to get their take on why housing prices are staying strong in this COVID-battered economy.
Despite all the uncertainly, it’s clear people are valuing their homes differently now that they’re spending more time in them.
Here are some of the trends we found:
1. Spring’s ‘Wait and see mode’ is over
LSTAR president Blair Campbell said when the COVID-19 outbreak hit in spring, many with plans to buy or sell went into a holding pattern, opting to see how the pandemic would play out.
This slowed the number of transactions, but prices stayed steady.
As Ontario moved to reopen the economy and life moved a little closer to normal, buyer confidence has grown and this is reflected in the August numbers.
“Demand and supply were low then, but demand has shot up since and supply has remained low,” said Campbell. “That combination is pushing up prices.”
However, as we move into fall, that buyer confidence is changing but in a way that’s pushing prices up, not down.
Campbell said people are looking to get deals done now ahead of a possible second wave of COVID-19 which some experts say could come as the weather cools and flu season picks up.
“Rather wait until when they really wanted to buy, some buyers are acting quicker,” said Campbell.
2. The GTA influx is still a thing
For years, Toronto-area buyers moving to London have fuelled London’s firm market.
Cheaper prices are still luring them down Hwy. 401, but realtor Rafi Habibzadah says the trend toward working from home is another factor. He’s hearing from clients who say their move to working from home may become permanent, which means they no longer have to live near downtown Toronto.
“I’m still getting a lot of clients looking to buy here from the GTA,” he said. “The prices there have skyrocketed and for them, we’re still very affordable.”
Campbell said London’s low COVID-19 case numbers could be another draw.
3. New urge to upsize
The pandemic is forcing many of us to use our homes in new ways: No longer just living spaces but also offices, rehearsal rooms and places where our kids connect with school.
With all these new uses, houses considered comfortable a year ago are now starting to feel crowded, pushing a need for many families to seek something with more space.
“I see a lot of clients wanting a bigger home, a home with a rec room, a finished basement. Working from home has required people to have more space,” said Habibzadah.
4. Loving it, not listing it
This builds off of trend No. 3. Some people who can’t or won’t move are choosing to stay and upgrade homes where they’re suddenly spending much more time.
Jeff Beam of Unlimited Home Theatre has had a busy summer.
“Outdoor audio, outdoor TVs have been great this year,” he said. “A lot of people are putting in pools.”
The catch is that a lack of certain materials and a disrupted supply chain are holding up some renovations or making them more expensive. Beam has run into problems ordering certain audio components and contractors are dealing with a lumber shortage that has delayed some projects and pushed up the prices of others.
“There’s a big backlog of people that we are still waiting to get to,” said Beam.
Another trend some agents spoke of: A firm market for cottages, as traditional family vacations are now either impossible or a logistical headache.
5. Multiple offers, sales well over asking
With buyer demand undiminished by COVID-19 and housing inventory low, multiple offers and sale prices way above asking price are now a part of London’s real estate reality.
Habibzadah recently represented a Toronto buyer interested in a London house listed at $530,000. His client offered $575,000 but then, facing multiple offers, sweetened it to $600,000.
“My client still didn’t get it. It sold for $625,000,” said Habibzadah.
The winning bidder was also from the GTA. And while that’s good for sellers, it’s pricing out some local buyers.
“People who are from London are having a hard time buying here because sometimes there are multiple offers,” he said.