London-area home sales plunge despite interest rate cut

Article content

The Bank of Canada’s decision to cut interest rates last month had little effect on the local housing market, with home sales in June down about nine per cent from a year ago, new figures show.

A total of 678 homes changed hands in June, the London and St. Thomas Association of Realtors (LSTAR) reported Thursday.

That compares to the 774 properties sold in May and the 745 sold in June 2023, capping what has been a sluggish first half of the year for home sales.

Article content

So far in 2024, 3,839 homes have been sold in the London area market that includes Strathroy, St. Thomas and portions of Elgin and Middlesex counties. That’s only 63 more homes than at this time last year, which ended up being the year with the fewest home sales the local market has seen since 2000.

The average price for a home last month was $671,309, about $4,600 lower than a year ago.

The low sales figures come as little surprise to Londoner Mario Kanoun, who said he saw little interest from buyers in the family home he’s trying to sell in the city’s Fox Hollow neighbourhood.

Kanoun said he bought the two-storey property, which features a modern design and amenities like a garage big enough for two vehicles, about two years ago for about $870,000.

The asking price for the property was $1.1 million, but after being for sale for more than a month, Kanoun is considering pulling it from the market.

“I had a couple of people come visit, but there were no offers,” he said. “Honestly, there hasn’t been a lot of interest. Maybe it is too expensive.

“I think the high interest rates may be the problem.”

Article content

Article content

Industry watchers seem to agree.

The Bank of Canada began its rate-lowering process with a June 5 cut that brought its key interest rate down to 4.75 per cent from five per cent.

But Ipsos polling indicates cumulative rate cuts of at least 100 basis points, or a full percentage point, would be required to boost home sales by a meaningful amount.

London is far from being the only market where home sales figures are dropping, with some markets seeing even larger declines.

The Toronto Regional Real Estate Board, for instance, reported Thursday home sales in the Greater Toronto Area were down by 16.4 per cent from last year.

The current market conditions may be hard to swallow for people who have only been in the market during the last decade and “have never experienced anything but an upward trend,” said London realtor Paula Hodgson.

“But it’s not really a slow market,” said Hodgson, who’s been involved in real estate for nearly 30 years. “You just can’t stretch for the stars with pricing right now.

Article content

“If you want a home that sells, then you have to be realistic with what other homes are selling for and mindful of what your competition is.”

Hodgson said while sellers in London aren’t experiencing the “lowballing” offers homeowners in larger markets are reporting, buyers are taking more control after years in which multiple offers on properties selling above asking prices became commonplace.

Part of the equation is the number of homes available for sale, which has been steadily increasing during the past months. In June, there were 1,510 new listings, LSTAR reported.

“Buyers, today, they don’t want to feel they’re overpaying,” Hodgson said.

“So, if they’re looking at a home, and they feel like it is overpriced, they have no problem waiting and looking at other properties; there’s no urgency.”

jjuha@postmedia.com

Article content