If you’re feeling house-rich these day, thank those deep-pocketed Toronto buyers.
With London-area real estate sales poised to set another record this year, an influx of buyers from the red-hot Greater Toronto Area earlier this year was given some of the credit.
But Anthony Passarelli, an analyst with Canada Mortgage and Housing Corporation (CMHC), was able to hang some hard numbers on that trend at Wednesday’s annual meeting of London St. Thomas Association of Realtors.
He said the number of London-area home buyers using Toronto-area realtors jumped from 2.8 per cent in the summer of 2016 to 10.9 per cent in the spring of this year. Passarelli said the actual number is likely higher because some Toronto buyers likely used London realtors.
He said those Toronto buyers had a big impact on the market because they tended to buy luxury homes in north London — worth more than $500,000.
“They also tended to bid more over the list price than London buyers,” Passarelli said.
He said the reason for all the Toronto interest was obvious in the growing gap between average home prices in London and Toronto, which spiked at roughly $600,000 last year.
But he said the Toronto market went into a slump in the second quarter of this year, with sales down about 40 per cent, after the provincial government imposed tighter rules on foreign buyers and home financing.
That showed up months later in the London area. Total sales were up 30 per cent in the first quarter of the year, compared to 2016, up two per cent in the second quarter, but down 15 per cent in the first quarter.
Average home prices were also up, peaking at $337,783 in the second quarter, before falling back to $325,000 in the third quarter
Passarelli said prices and sales in the London area should stabilize next year, as the GTA slowly recover from its mid-year slump. He said there should be more homes on the market next year after the number of listing became very tight this year.
“We won’t see the sellers’ market we saw earlier this year. It will be more of a balance market overall, but still pretty robust” Passarelli said.
The home sales to home listing ratio is used to gauge the market, he said. Anything above 60 per cent in sales to listing is considered a buyer’s market and that ratio peaked at 85 per cent in the first quarter before falling back to 69 per cent in the third quarter.
Passarelli said he does not expect tighter mortgage rules next year to have a big impact on the London market.
He said CMHC calculates that about 49 per cent of London households have the income to buy an average home, compared to 36 per cent in Kitchener and only 19 per cent in Toronto.