Ryan Hodgson

Results are in for October Real Estate sales for London and surrounding area. The number of home sales are down from last year in October. The information can be found HERE. Judging by the activity in November, it looks like the number of homes sales will be down when compared to November of 2007.

Some of the reasons for this are obvious. Some home buyers are sitting on the sidelines to see what happens after the turmoil in the world financial markets the previous month. Some are no longer in the market due to the economy. We had a record number of sales in September - some of this was because of people rushing to take advantage of the no money down program from federal government which expired in October, and nice weather helped too. So those people who might have normally purchased in October or November, already bought. And finally, the overall numbers have to be less then 2007 - 2007 represented a record number or real estate sales for the year. There was no way the market could duplicate it. Overall scope, the number of real estate sales have been very encouraging.

It's a great time to buy a house now. There is inventory for buyers to look at, and buyers are finally again able to negotiate - sometimes in very favourable terms. Once a few months past and we get into March and April of 2009, people are going to realize that the London economy is going to be OK, and 2009 should prove to be a good year for real estate. Low interest rates, good inventory, and affordable housing are very attractive things. I'm going to predict a 2009 which will include historically strong sales numbers and average sales price which will remain constant throughout the year. Considering the alternatives we've seen in other markets thoughout the world, we should consider ourselves lucky.

I haven't commented too much on the current state of the economy in Canada or London. The media and it's entourage have managed to blow things out of proportion again, which is normal. It's created a lot of unknown, uncertainly, and panic amongst the public. Most of it's needless, but you can't avoid it.

The United States' "give anybody who breathes a mortgage" financial problems have come back to haunt them (along with such things as poor fiscal responsibility of the government ie racking up huge debt over the past 5 years) and have thrown the world for a loop. I'll be the first to admit, I'm very glad I don't live in some of the US markets or sell real estate there. It must be tough.

The US economy definitely has an effect on Canada and the world. However, this doesn't mean Canada is going to fall down the same path as the US economy and blow up. We are not close to having the problems they have, our economy is on stable ground to weather any downturn and the banking system is in great shape (thank you Canadian government for your policies and not succumbing to US pressure of deregulating the bank system post 911).

I would be worried if inflation is high, governments were running debts, and the economy was poor prior to this fiasco. But it's not the case. Government is in a position to cut interest rates, which they are doing (hello mortgage rates!) and help the economy maneuver through things tough times. I'm not saying all is rosy, but the sky is not going to fall. The economy will slow down in the next 6 months or so......which is normal.

Which brings me to the dreaded word. Recession! People treat this word like the Ebola virus. I think it is because it's been over 15 years since our last recession started. A recession is defined to be a period of two quarters of negative GDP growth. It's not a depression, it's not a life changing event. It's a period of negative economic growth for the country. If it happens to Canada in 2009, we will get through it. In saying that, the outlook for the economy is not even that bad.

As per Bank of Canada article:

The United States may be sucking the global economy into recession, but Canada's economic strengths will keep us on safe ground, the Bank of Canada says.

In yesterday's monetary policy report, the bank predicted slow growth for Canada while its governor, Mark Carney, warned the media not to overstate the downturn.

"Newscasts overshoot just like markets overshoot and the sky is not falling, the sky is still there, the sun is still coming up every day and the Canadian economy is still functioning," Carney said. "Be careful on overshooting on the pessimism."

Carney's report said the American economy was already in recession and the global economy was headed toward a mild recession.

Canada, Carney says, would squeak through this mess with "sluggish growth."

That means annual economic growth of 0.6 per cent this year and next, before increasing to 3.4 per cent by 2010. Carney said the reasons we'll escape the downturn are Canada's strong banking system and the low debts loads, compared with other countries, carried by consumers and governments in Canada.

"We don't have the imbalances in our economy that other economies have going into this time of difficulty," Carney said. "It's very important to stress that unlike in a number of other countries, we have a financial system that is functioning."

Carney said the big taxpayer-funded banking bailouts we are seeing around the world are an effort by countries to bring their banks up to the safe level Canada currently enjoys.

For Canadian consumers, there were some positives. Inflation, specifically with respect to the cost of goods we buy, was expected to hit a new low by the middle of next year.

"In terms of pricing, in the near term, we are going to see some softening of prices," Carney said.
The other good news in the short term, says Carney, is the plunging loonie will help manufacturers and exporters deal with a U.S. downturn expected to hit that industry hard over the next year.

Carney also applauded the government for announcing the creation of the Canadian Lender Assurance Facility yesterday, which will provide loan insurance to banks.

"We think it's a sensible thing to have done," Carney said. "With all other jurisdictions introducing some form of guarantee -- it makes sense to ensure our institutions are not at a competitive disadvantage."

The insurance would allow Canada's banks the option of paying from 1.6 per cent to 2.1 per cent of the money they borrow to buy a government-backed guarantee that what they borrow will be repaid should the bank be unable to do so.

What does this mean for home sales in London Ontario? Things are going to remain decent over the next year. We won't see record sales, but a very healthy real estate market. The economy is decent - even with the terrible manufacturing sector suffering. Homes are affordable and interest rates will remain low. People are buying houses. There is more selection now (thanks to more available listings) then in the past 5 years. It's a great time to buy, buyers are now in a position to negotiate price and find the home they want (much easier then 3 years ago). And there is not going to be any bust in homes prices. Things will remain consistent.

And once the dust settles, in 6 months people will find that life in London is no different then it was 3 years ago.

London Ontario's real estate market continues to produce strong numbers. September 2008 was the best September ever for the real estate board in terms of number of sales. See the News Release below.

For where the economy is, and where it is headed, London, Ontario is in a good position to withstand any major negative impact from the economy. It will be interesting to see how sales go for the next 6 months. Sales will likely slow down, but there is no bubble to burst so we shouldn't see any noticable decrease in prices. In fact, if interest rates are reduced as is predicted, I have a very optimistic view for real estate sales in 2009.


Last month, 769 homes exchanged hands in the jurisdiction of the London and St. Thomas Association of REALTORS® (LSTAR), including 625 detached homes (up 19.3% from September 2007) and 144 condos (up 14.3%). Year to date, 5,664 detached homes and 1,449 condos have been sold - down 6.7% and 8.3% respectively compared to the same period in 2007.

"This has been the best September ever for home sales in our area," says Bruce Sworik, LSTAR President. "The next-best September was in 2005, when 746 homes were sold. In September of 2007, 650 homes were sold. We are very pleased with these figures - so far, 2008 has been a great year." In 2008, the area has seen its third-best February, its second-best May (also its third-best month ever) and its second-best July on record.

"Year-to-date sales are at 7,113, which is just 7.1% below the same period for 2007, which was an outstanding year," says Sworik. Year-to-date sales are just below the five-year average of 7,269 but well above the 10-year average of 6,597.

"Also, St. Thomas had a great month, with a 10.6% increase in sales. The good news continues for St. Thomas because, year to date, the average price of a home there stands at $188,472, up from $171,990 in the same period last year," says Sworik.
The best-selling house style in LSTAR's jurisdiction for the month of September was the two-storey, followed by the bungalow, the ranch, and the townhouse condo:


Homes in LSTAR's jurisdiction continue to maintain their affordability compared to other major Ontario and Canadian centres. According to the Canadian Real Estate Association's Major Market Release for August 2008 (the most current available), the average price January 1, 2008 - August 31, 2008 year to date for:

􀂃 London and St. Thomas was $213,171;
􀂃 Calgary was $411,510;
􀂃 Durham Region was $274,116;
􀂃 Edmonton was $337,399;
􀂃 Hamilton-Burlington and District was $284,951;
􀂃 Kitchener-Waterloo was $273,185;
􀂃 Ottawa was $292,181;
􀂃 St. Catharines & District was $222,941;
􀂃 Toronto was $385,035; and
􀂃 Greater Vancouver was $606,088.

"The number of new listings of homes for sale was 1,448 in September 2008, an increase from 1,283 in August and 1,241 from last September," says Sworik. "And our active listings - the number of listings which were active at the end of the recording period, in this case, September 30, 2008 - currently stand at 3,669, up 24.6% over the same time last year, which means great selection and choices."

"While jurisdictions elsewhere may not report such positive numbers, it is important to keep in mind that the national housing market is made up of different communities. Every area is different in terms of trends and pricing, and in London we are seeing a great year," says Sworik. "It goes to show that local consumers feel very positive of our housing values here."

The London Free Press had an article detailing London's construction industry. It is a good read and is posted below. It touches on London's diverse economy weathering the economic uncertainly in Ontario and paints a good future for the construction industry and London's economy.

With the manufacturing industry really struggling and all the negative news we hear in the media, it's good to keep things in perspective and understand where London is now and where it will be in 5 years or 10 years down the road.


The value of construction in London is about to top $800 million for the first time, despite the region's economic slump.

"This is going to be the biggest year ever. We are at $640 million now with four months to go, we will top $800-million," Rocky Cerminara, the city's director of building controls, said yesterday.

That is startling, considering the city has an unemployment rate of 6.7 per cent, higher than the national and provincial average. In August, London had 244,600 people working compared to 247,000 in 2007, a decline of 2,400 workers.

The boom is buoyed by $100-million in construction at the London Health Sciences Centre.
"I believe it shows that we have a diverse economy," Cerminara said. "If one sector takes a hit, the other sides will hold us up."

Gerry Macartney, general manager of the London Chamber of Commerce, agreed London's diversity has kept it moving along.

"We do enjoy a balance and, frankly, we are able to weather these economic conditions better than most," he said. "We have steady, incremental growth."

As for the hospital construction that has lifted the building totals, expect much more to come, said Dave Crockett, vice-president of facilities management for LHSC and St. Joseph's Health Care London.

The $100 million issued this year is for the completion of the Children's Hospital of Western Ontario and Grace Donnelly Women's Health Pavilion, the latest stage in what has been a $250-million project at both LHSC and St. Joseph's. But there will be another $300-million wave of building from 2009 to 2013, he said.

"This is important because of its scope and size and (because) it will bring more services, including 76 beds, to capacity. This will help a lot," Crockett said.

There are 300 construction workers at the Victoria Campus and 100 at St. Joseph's, which is also doing renovation work because some programs will shift there. The reconstruction of that hospital began in 1999. The first phase -- a $350-million project -- ended in 2006.

Brian Waltham, vice- president at EllisDon Construction, which is building the hospital tower, wasn't surprised by the boost in building, saying the industry has been steady and he doesn't anticipate a letdown.

"There is doom and gloom in the media, but the building that is going on will keep things going for a while. We are ecstatic."

According to building figures from January to August, not too many sectors appear to be taking a hit.

Institutional building this year stands at $224.8 million compared to $104 million over the same period in 2007. Surprisingly, industrial -- the sector that has been hit hardest by layoffs and plant closings -- is also up, with $59.6 million compared to $44.1 million last year, thanks to a new manufacturer, Hanwha, and the development of new industrial space that will be leased to tenants.

Residential building spending is up to $307 million over $285 million in 2007, driven largely by apartment building. Detached home building dropped 33 per cent.

Commercial building showed the largest decline, with $45 million in permits issued from January to August compared to $64 million last year.

TOP FIVE 2008 PERMITS

LHSC, $90 million. (It also has a second $10-million permit).
$18.5 million, Fanshawe College residence.
$18.3 million, seniors care facility.
$16.5 million for Hanwha, a Korean building supply company.
$16 million, seniors apartment building.

THE NUMBERS

Value of building permits
2008: $800 million+ (projected)
2007: $722 million.
2006: $773 million
2005: $622 million
2004: $648 million

London/St Thomas Association of Realtors has released stat information for the end of August. The market is still doing well. Homes are selling. We are in a much more balanced market now compared to past years. Below is the official news release. For a complete stat pack, click HERE.

I bolded two important parts - 1st showing the real estate market is having a very healthy year. And the second showing why we are in a balanced market (buyers having more selection making it easier to buy) with the continued large number of homes sales.

Last month, 762 homes exchanged hands in the jurisdiction of the London and St. Thomas Association of REALTORS® (LSTAR), including 607 detached homes (down 11.8% from August 2007) and 155 condos (down 15.3%). Year to date, 5,043 detached homes and 1,307 condos have been sold - down 9.2% and 10.2% respectively compared to the same period in 2007.

"It's important to keep these direct comparisons to last year's figures in perspective," advises Bruce Sworik, LSTAR President. "A total 9,378 homes were sold in 2007, making it far and away the best year for real estate sales since our Association began keeping records in 1978; the previous record of 8,916 sales was set in 2006. Between January and August 2007, a total 7,009 homes had already been sold - 442 units more than during the same period in 2004 (the next highest total). Sales so far this year may be down 9.4% compared to the same period in 2007, but 2008 has actually seen our third-best February, our second-best May (also our third best month ever) and our second-best July on record! Year to date sales are just 3.3% below the five-year sales average and currently stand 6.5% above the ten-year average."

Homes in LSTAR's jurisdiction continue to maintain their affordability compared to other major Ontario and Canadian centres. According to the Canadian Real Estate Association's Major Market Release for July 2008 (the most current available), the average price January 1, 2008 - July 31, 2008 year to date for:

􀂃 London and St. Thomas was $213,705;
􀂃 Calgary was $414,213;
􀂃 Durham Region was $274,525;
􀂃 Edmonton was $338,511;
􀂃 Hamilton-Burlington and District was $285,065;
􀂃 Kitchener-Waterloo was $273,473;
􀂃 Ottawa was $293,385;>􀂃 St. Catharines & District was $221,646;
􀂃 Toronto was $387,470; and
􀂃 Greater Vancouver was $610,306.

"The number of new listings of homes for sale on the Multiple Listing Service® (MLS®) eased in August 2008, down 18.2% from the 1,568 new listings taken in July. However, new listings are up 3.7% compared to August 2007," observes Sworik. "More significantly, our active listings - the number of listings which are active on the MLS® at the end of the recording period, in this case, August 31, 2008 - currently stand at 3,543, up 25.5% over the same time last year."
Sworik adds: "Compared to this time last year, listings are up, average prices are up, and sales are down by less than 10% from that record-breaking total of 7,009 unit sales ... we'll take it! There's certainly no real estate bubble bust taking place here in LSTAR's jurisdiction!"