Is your home price declining or is this the new market trend? This is a question that as a Real Estate Broker, I ask myself on a daily basis. It was no surprise that the January and February Real Estate Market saw some of the largest growth in the average home price. The home inventory in the London, St. Thomas area was at an all-time low, COVID continued to be a dominant force in home buyer decision making, and there was the looming fear of increasing interest rates.
To help answer this question, I’d like to go back to 2021, the year that we saw a full cycle of the new COVID-19 market. A real estate market in which a home price appears to be highly influenced by lockdowns and reopening. In the beginning months of 2021 and the end of 2020, the London and St. Thomas Real Estate Market saw a significant increase in the average home price point. In fact, over the 5 month period of December 2020 to April 2021, there was an average home price increase of 19% across the London and St. Thomas Real Estate Market. During this same period, Ontario, and especially Toronto was in the longest COVID-19 lockdown.
During these times, the reason to remain in larger cities became unclear and Sellers were less likely to place their homes on the market due to concerns about COVID-19. The lack of space, privacy, and high cost of living outweighed remembering what the good times of Toronto and the GTA really looked like. As Toronto and parts of Ontario began to ease up their COVID-19 restrictions, their home situations became a little less concerning, while vacationing and spending time outside of the home was more important. To give an example, during the next 5 month period from May 2021 to September 2021, the London St. Thomas Real Estate Market saw a decline in the home price of 2.5%. In the following 5 month period from October 2021 to February 2022, there was a 22% increase in average prices for the London & St. Thomas Real Estate Market. Once again, during a period of intense lockdowns.
Now, I’m not saying this is the only correlation with home prices, however, I do believe it has played a significant role and it’s interesting to note the changes during these periods. Other factors such as interest rates, government intervention, and buyer fatigue also appear to play an equally important role in the changing real estate market and home prices. Similarly, during previous years such as 2019, 2018, and 2017, the London and St. Thomas Real Estate Market actually saw a peak in home prices during the months of April and May.
As we come into the Spring market of 2022, I am expecting that the closures relating to COVID-19 have come to an end, and that we will begin to see home prices level out across the London and St. Thomas Real Estate Market. Buyers will be distracted with getting back to life before COVID-19 and the fear of high-interest rates will cause many to reconsider how much they will be spending on a mortgage.
Questions about how this might impact the sale price of your home? Reach out anytime or request a home evaluation by clicking here.