Episode 23 - 2023 London, Ontario Real Estate kickoff episode. Your questions answered!

In episode 23 of this new year kick-off podcast, Phil updates you on London's 2023 real estate market and answers your most common questions for the year ahead.

If you are thinking about buying or selling a home or condo in London, Ontario and area, please feel free to reach out to Phil with any questions at any time via email or by text (226-977-2348).  Always here to help with your real estate questions.

Learn more about London real estate from Phil and search local listings here - www.philbailey.ca

Phil Bailey is a Sales Representative with HouseSigma Inc. Brokerage in London, Ontario, Canada.

Disclaimer - This podcast should not be taken for any legal or professional advice and is just my opinion based on working as a real estate agent in London, Ontario, and area.  I always recommend speaking to professionals about your specific situation before making any big decisions.

Transcript

Speaker 1: 0:00

Hey everyone, Phil Bailey here back for another episode of the London Ontario Real Estate Podcast. We are in 2 20, 23. Everyone I know, it's been a little while. The holidays got the better of me, but we are back and it is a new year. I hope everyone had a wonderful holiday and great start to 2023. We're in early January right now and I just wanted to jump on the podcast today and talk about all of the questions that I am currently getting from my clients. Um, number one coming up, and I'm gonna do a few today on the podcast, but number one going, coming up is what is currently happening in the market in London area. So if you look at the most recent stats from December of 2022, so just a few weeks ago that just wrapped up, the big story that I am talking to a lot of people about is this home sold number. So there's only 299 homes sold according to the London and St. Thomas real estate board. That is really low folks. Uh, typically in a typical year, there'd be significantly more homes sold. Uh, if you look at the, the average, uh, for the past little while, I'd say you're probably like half, uh, maybe even less than half, uh, over, over consistent basis over the last few months of the year. I think there was some that were even more, yeah, at least half and maybe even a little bit less than that. Uh, so what I'm noticing with that and from that stat, what I'm picturing is that there's a bit of a tug of war happening right now between sellers and buyers. Buyers are trying to get this incredible deal and sometimes it's not just them being aggressive, sometimes it's just what they can qualify for. Right now, interest rates have gone up. So the concern with interest rates going up is that the qualification rate has also increased substantially, and that means that people can't qualify. So if you have a house that you want, you currently want$600,000 for, someone might not able to pay$600,000 for it cause they can't afford it. So there's less opportunity for that many buyers to be able to come to the table and be able to purchase your home. That said, I also think there's a bit of something, what we call sentiment right now, which means that they think the market is going in a certain direction, maybe even more into the buyer's favor and people are just waiting and seeing. So bit of a wait and see. I think that happened December. Uh, typically in December we do see a slowdown in terms of the number of transactions. You know, people have this thing that they do called, uh, holidays, so they go away a little bit for, uh, for time. I know a lot of people that I see are, uh, in beautiful places far away from uh, this, uh, this weather in, uh, in Ontario right now. Uh, but I am noticing that that may be a bit of a factor, um, and even more of a factor in 2022. In terms of the average price, uh, we're just hovering just over the$600,000 mark. Obviously that would, the average price is down, um, quite a bit from what it was, uh, earlier in 2022. Um, in terms of the months of inventory, about 3.8 months of inventory, which is, um, quite, uh, much, a much bigger number than at us before in terms of time on market. I'm also noticing time on market is shifted up when I'm listing something. Right now, I'm telling people, you know, be prepared for 60 days on market that isn't, uh, unrealistic, uh, for you anymore. I think average is probably hovering between a month or two on market. Obviously before, you know, we're looking at seven days on market and that wasn't even really real because we were holding offers on almost every single home in the city. So the other question that I am getting a lot right now is, where are things gonna go in 2023, Phil? And honestly, I, I ordered the crystal ball is what I've been telling you every day. I ordered the crystal ball for Christmas, but it did not come unfortunately. So I'm gonna have to base this on, uh, experience and just what I'm currently seeing in the market. So, so far, believe it or not, in my little world of real estate in London, 2023 is actually started off relatively quickly. Um, the listings that I do have on market are getting showings again, uh, the listings that I have, I'm coming have a lot of listings coming up on market, which is, uh, gonna be interesting. My buyers are actually starting to, uh, to look, uh, pretty much, much more aggressively than they were in 2022. And I think some people just say, okay, we're gonna have to get used to some higher interest, uh, rate environments compared to what we had before.<laugh>, which is definitely not a high interest rate environment compared to, uh, what people, uh, saw previous years, but it's still, you know, higher than it was. So it's all relative to us. And in terms of what I see in the year ahead, I mean when I talk to mortgage brokers and I talk to, when I look at reading, you know, things from economists that I'm seeing, one of the things I'm, I've, I find really interesting, again, this is just something I'm reading, I have no idea exactly where, where interest rates are going, cuz obviously the economy impacts that. But if interest rates do start to come down or even stay the same for the, for the next little while they think, you know, January probably will go up. We had some, uh, very good job numbers, which I was reading about, which, uh, will lead to probably them increasing interest rates to potentially cause more of a recession as what I was reading. Um, you can have your opinion on that. I know I have mine. Um, but what what's interesting to me is that if interest rates do say the same or start to come down maybe in the later half of the year, will that have the same impact that they've had going the other way? Right? But I think there's again, that when we go back to sentiment and what's happening in the market, I think that you could see a, a shift happen and yeah, I'm a little biased. I'm a real estate agent, but I also own real estate and I think it's a great investment for, for me personally. So yeah, obviously I want real estate to go up over the long, long term, um, but what's best for my clients, um, you know, right now really depends on, on who I'm working with. So I think in terms of what we see is, yeah, if interest rates come down, you could see the market go up again. Um, I'm noticing a lot of the GTA folks are coming back to, uh, London, uh, whether you like it or not, and, uh, that a lot of investors are coming back as well and trying to get deals right now. The thing that's interesting to me is that yes, you are paying a higher

Speaker 2: 5:57

Payment per month right now with the interest rate increase, but I mean it's, it's likely based on everything I'm reading is not gonna be forever. So I think a lot of people are thinking, okay, I, I pay my highest, my higher mortgage rate for the next year, maybe even less, and then I've locked in my price. So I've locked in my price at say 50 to a hundred thousand dollars less than I would've before. And then I'm able to obviously keep that house for a long term. So what I tell people with real estate is if you can't really own it for five years, I wouldn't really, I'd be very cautious about entering that, uh, that purchase. Um, not saying you have to own it for five years. Hey, if the market goes really well, uh, or something changes in your life, of course you could sell it. But the thing is, is you might want to be able to have a plan to rent it out if the market doesn't, uh, go completely in your favor, uh, for the next little while. Um, third question I'm seeing is, you know, what have I noticed that's different in the real estate market and what will be different in 2023 compared to 2022? Uh, the big one that I'm noticing is that the conditions that we're seeing on offers are significantly different. Um, and there's more of them<laugh> than there was in in early 2022 for sure. I mean, for the latter half of 2022, we were seeing obviously conditions were back in a, in a big way. So what conditions are we seeing? Well, you're gonna see the typical ones. Financing's really important. I would put that in every single deal you possibly can if you're, if you're a buyer, um, just because you want to talk to a mortgage broker or your bank or your a lender, but you also gotta make sure that house appraises at the value that it should. And you also wanna make sure that you have all your ducks in a row. So just someone telling you, yeah, you're good, you're good, you filled out the online calculator, that's not good enough. You need to provide documents. Um, you want to have someone that you trust on the other side of that process to ensure that you can move forward with that deal. So typically you're gonna see a finance condition. You have five business days, maybe, maybe a little bit longer, a little bit less depending on the situation. Home inspections are back for sure. Uh, if I had the opportunity, the home inspection, I would do it. Uh, just because you can avoid some of the issues. You obviously wanna have a good competent home inspector. Um, the few that I work with in London are amazing. Um, and I honestly did one in my own house when I purchased it, uh, because I wanted to make sure that there wasn't anything I was missing. Yeah, there's a few things I missed probably. Um, I'm not a home inspector, I'm kind of a generalist, so there are things that I want to look at and make sure that I understand it or at least have a question for those things when it comes to home inspection. The other one that I'm seeing when it comes to conditions is a home to sell condition. So this can get a little bit complicated and it can be a bit of a, uh, checkers game being played, uh, or maybe a dominoes would be a better, uh, term to use there. But, uh, when one deal is able to go through, obviously another deal is sometimes able to go through. So for example, if you purchased a house in Mississauga, we'll say, and you're moving there from London, you put that offer conditional and you're selling your house in London, so you're able to kind of lock that house up. The problem is, is that you're not really locking it up, cuz typically what the other side will say, well the seller that in this case in Mississauga would say is, Hey, we're good with your offer, we'll take it. But we're also gonna do what's called an escape clause. Escape clause typically lasts about 24 to 72 hours in that range somewhere. And that escape clause is basically giving them the opportunity to accept another offer and giving you the opportunity to either firm up your offer very quickly or walk away from it. Um, it's not allowing them to take a better offer and then just kick you out for with no with no timeframe at all. But it really puts the pressure on you when you do have that going. Cuz you could have your house listed in London and they get another offer, then you only have 24 hours or 48 hours to kind of firm up or, or depart from the deal. If you're not comfortable moving forward, obviously you'd have to take your house off the market and cancel things. So that condition, um, isn't fun. Uh, I don't like it, uh, but uh, you know, I have to protect my clients. So we put them into to deals, um, when we, we have to. Uh, the other thing you'll, you know, you're, you're gonna see also just more conditions in general is kind of, kind of, I mentioned, um, firm deals are happening. Like I've done, I did a few in November, I believe two of them. Um, but they're not typical. I'd say if they are happening, they're probably at lower, uh, price points, like under maybe 500,000, which I know isn't low to everybody, but under that price range. Um, and they'll be obviously encountering multiple offers. Um, the last kind of thing I did just want to touch on today is just what are the kind of the, the tips I have for the 2023 market so far. I mean, when we look at 2022, I, my tips that I had for you in January, February were vastly different than what I had for you in October November because the market ch changed so drastically. Um, I'm hoping it doesn't change drastically again because it's really hard for everyone to cope with it. Um, but if it does, I mean I could see it potentially going the other way, which would be, uh, which would really interesting. Again, this is just my opinion. I don't know, I don't have a crystal ball guys. I ordered one again, didn't come. But what I am, you know, thinking about for, for tips is just make sure that I'm financing. You've talked with a mortgage broker or a your bank or a lender before you've started the house, really buying process because what you would've qualified for maybe a year ago,<laugh>, which doesn't seem like a long time to some people, is probably a lot different than what you can qualify for now just because of the qualification rate and how high it has become because of the rising interest rates. Um, we want to make sure that you have that done, uh, before we really start looking because what I don't want you to do is go into house and then be really, really

Speaker 1: 11:52

Disappointed cuz you actually have no ability to buy that house. Um, and then you have to look at a lower price point. So it's kind of like putting the toothpaste back in the tube. Not the easiest process to do. And, um, it's not fun for you, it's not fun for me, it's not really fun for, uh, the sellers either that we're looking at their houses. So definitely want to make sure you do that. I mean, that would've been a tip I always have. Um, but right now I think it's really, really important to kind of take a look. Again, if you need someone to talk to about that, let me know. Uh, just text me and, uh, I can help you out with, uh, with, with that and just kind of connecting with someone that's competent and knows what they're doing. Um, in addition to that, you know, I would just kind of, uh, be prepared to, to look at a lot of houses. If you're looking at buying right now, you might wanna start the process a little bit earlier. Um, a lot of folks are looking at potentially getting a couple options, trying an offer on one option. If it doesn't work out, they'll try on another option. Uh, inventory with it being a lot higher than it was, uh, does give you more options than you know, than we definitely saw at the earlier half of 2022. And you're probably avoiding multiple offers on most of those houses or almost all of those houses. So we can try, try an offer. If it doesn't work out, we can try another offer. Um, you know, the buyers are getting much more in the driver's seat. C could that change? Absolutely. Um, you know, I'm noticing, uh, again, that tug of wars be game is being played and some sellers are just not willing to, uh, come down to a certain price because, you know, they wanna do things too. They wanna buy another property somewhere else they, you know, just won't sell. They'll just wait it out, which, uh, you know, fundamentally I could see why that that could work as well. So that is it for the podcast today. Uh, it's Phil Bailey here. I'm a realtor in London from the House Sigma team. If you have any questions, uh, that you want to kind of go into more detail on, or even if you have a thought on what you're seeing in the market, I'm really curious on that. Um, also, I'm really welcome to talking about other topics. This is kind of just a, you know, start of 2023, talk about a few questions that I'm having and kind of get the ball rolling for you. But I'd love to, to hear what you would like to see on the podcast. Or hey, maybe you're a guest, you'd want to come on the podcast. Um, I'm, I'm typically open to that as long as it's relevant to the London real estate market and you're not trying to sell, uh, everyone something, um,<laugh>. But if you want to get ahold of me, my direct number, you can text me please, uh, 2 2 6 9 7 7 2 3 4 8. Please don't spam me, just text me questions or be legitimate. Uh, 2 2 6 9 7 7 2 3 4 8. Um, or you can also just go on my website just uh, ww phil bailey.ca and you can contact me from there. I hope everyone has a great rest of the January, 2023 and I'm always here to help. Again, it's Phil Bailey from the House Sigma team on a local realtor in the London market. And I'm always here to.