London Ontario Condos: A 2010 Market Report
By Peter Daoust and Dianne Wilson
The London and St Thomas Real Estate Board has just released their first quarter 2010 statistics. Here is a snapshot of some of the things that they had to say:
2076 Units sold in the first three months of 2010
VS
1571 Units sold in the first three months of 2009
VS
2075 Units sold in the first three months of 2008
Closed Sales
1446 VS 1050 VS 1523
Average Selling Prices
North
Month of March -291,196
Last 12 Months – 280,472
Year to Date – 309
South (includes West)
Month of March – 269,230
Last 12 Months – 251,739
Year to Date – 388
East
Month of March – 192,101
Last 12 Months – 188,123
Year to Date – 291
Yet all of this is really only part of a somewhat bigger story. Many hidden trends are found within these numbers and let us share with you a few.
1 – The downtown condo market has gotten off to a strong start in 2010.
• 695 Richmond Street – Ten MLS sales in the entire building in 2009 and already eleven MLS sales in the first three months of 2010. Two bedroom unit selling prices are up 10.8%
• 155 Kent Street -Three MLS sales so far this year vs. eleven sales in 2009. The prices of two bedroom units are up this year also over ten percent.
• 600 Talbot Street -Three MLS sales so far this year for two bedroom units vs. six for the entire period of 2009. Once again, prices are up over ten percent.
• 389 Dundas Street -Four MLS sales so far this year vs. seven in total last year. Prices are up over ten percent.
• 323-363 Colborne Street -Only four MLS sales so far this year vs. twenty-six sales last year. Once again, prices are up ten percent.
One might argue that these price increases are deceiving given that the 2009 market got off to a slow start but the fact remains that prices are up. One of the probable reasons that the market has gotten off to a strong start, although there are many, is that “Toronto Buyers” with a “Toronto perspective of rising prices” are influencing the student driven market.
2- The “West End” Riverside Trend
One of the nicest areas of the city for condo living in London may be found to the North of The Thames River along Riverside Drive. Guess what the condo market did in that area in the first three months of 2010? We are talking about 445 Riverside Drive with twenty eight units, 519 Riverside Drive with forty three units, 521 Riverside Drive with eighty five units, 1151 Riverside Drive with twenty-seven units and 1200 Riverside Drive with thirty four units – about two hundred and eight seven units in total. Well, in the first three months of 2009 only one MLS sale happened!
If we want to expand the sampling size and add in three neighbouring complexes; 233-471 Everglade Cres (118 units), 417 Hyde Park Rd (17 units), and 455 Hyde Park Rd (34 units), the results would still be the very same. These additional 169 units also did not see any MLS sales!
How can all of this be explained? Obviously it’s a sellers market in this area and it doesn’t appear that the bank is knocking on anyone’s doors trying to foreclose. What’s more, the golfing season has started early this year! Clearly, owners of condos in this area are happy.
3 – The South East End ‘Summerside’ Condo Marketplace
If you check out our www.yourcondoworld.com East Map, you will find a complex of 78 units at 2015 Meadowgate, a complex of 42 units are 1199 Reardon Blvd and a complex of 38 units at 325 Lighthouse Rd. These are all newer condo units. In 2009 there were a total of seventeen MLS sales in these complexes and so far this year (for the first three months of 2010) there has been only one sale! This observation mirrors what we have just identified happening in the Riverside West area.
What does this tell us? It tells us that condo owners feel a need to stay invested as they are confident about the real estate marketplace. It should also be noted that in this new period of low inventory levels many real estate agents are scratching their heads in exasperation. It also opens the doors to a new era of “non-licensed” marketing people selling “for sale by owner” self marketing kits. In a tight market some sellers, whether right or wrong, are bound to think that this is the way to go. Do these self-marketing sellers end up getting top dollar for their homes? We don’t think so. This in itself is a whole new topic!
4 – High rise condo sales near shopping malls vs. high rise condo sales, where locations dictate that it is best to have a car?
Transportation costs are once again on the rise and many of today’s entry level condo buyers are becoming increasingly sensitive as to the need to be within walking distance of a grocery store.
In our Nov 4th, 2009 blog we talked about the two twin condo towers at 1103 and 1105 Jalna Blvd. In 2009, thirty units in these two buildings changed hands on the MLS systems and in the first three months of this year, nine units already have. What’s more, the average selling price of a two bedroom unit the first three months of this year has gone up to $88,900 compared to $80,000. Contrast all of this activity to what has happened over at 45 Pond Mills Road, a two hundred and fifteen unit high rise building also in the South End, which finds itself further away from shopping and thus more automobile dependent. It’s an attractive high rise building with a beautiful view overlooking trees, parks and the river. In 2009, twenty two units changes hands in the MLS system in this complex whereas in the first three months of 2010 only one unit sold on the MLS system. Clearly today’s buyers are more concerned about shopping friendly locations than ever before.
5 – The New Construction Market
In the year 2009, 966 building permits were taken out for single detached homes and townhouses in London. That compares to 1,130 permits taken out in 2008. In the duplex, triplex and quad apt. buildings, 440 permits were taken out in 2009, compared to 1,506 permits in 2008.
Clearly, the new construction industry, as did most categories of the economy slowed down last year. It also has to be pointed out that much of this inventory remained unsold at the end of 2009 and has now carried itself over into the first quarter of this year. On a differing note, it is somewhat ironic that there were 226 permits taken out for swimming pool fences in 2008 and 396 permits taken out for the same thing in 2009. Clearly, some people still have money to spend.
On a differing note, our London Transit Commission now has to struggle in its decision as to whether or not they should be providing bus services to many of these new areas. Should Lambeth or Oxford St West, West West for example, be serviced? In these cash strapped times, even the thoughts of improving the frequency of the bus services along much needed Ambleside Drive is open to debate.
What’s going to happen this year in the new construction scene still remains anyones guess and the impact of higher lot levies and the impact of HST tax have to be added into this equation. It should be interesting to see what happens in 2010 with interest rates, new construction starts and unemployment levels.
6- Other interesting first-quarter trends:
Observe the following examples:
• 166 Southdale Rd West – 12 MLS sales in 2009 – No MLS sales in the first three months of 2010.
• 1919 Trafalgar St – 8 MLS sales in 2009 – No MLS sales in the first three months of 2010.
• 1-15 Jacks Way – 24 MLS sales in 2009 – 1 MLS sales in the first three months of 2010.
• 683, 693 & 703 Windermere Rd – 18 MLS sales in 2009 – 1 MLS sale in the first three months of 2010.
• 45 Pond Mills Rd – 21 MLS sales in 2009 – 1 MLS sale in the first three months of 2010.
Perhaps the truth of the matter is, the market has gotten off to a slow start. April however, is off to a great start!
In closing, 1446 properties have closed with the use of the London and St Thomas Real Estate Board in the first three months of this year, aided in part by the unseasonably warm weather.
We would be happy to hear your comments on this topic.
Cheers!
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