The COVID-19 pandemic has upended the economy and drastically changed how we live and work. While the real estate market in London, Ontario is not immune to these changes, COVID-19 has affected the housing market here in some surprising ways.
If you’re considering selling your house in London, Ontario in 2020 or beyond, how should COVID-19 play into your decision? In this article, we will help you decide by looking at:
· How COVID-19 has affected real estate in London
· Whether you should sell now or after the pandemic
· What the post-COVID economy could mean for Southwestern Ontario, and
· How to minimize the risks of selling your home during COVID
How Has COVID-19 Affected the London, Ontario Housing Market?
Given how much COVID-19 has battered the economy, you may expect Canadian housing prices to have fallen. While prices did drop in March and April when the country went into lockdown, since then they have soared to new heights.
In fact, in September the average price of a home sold in Canada reached $604,000—a new record and an increase of over 17 percent over the past year. In Ontario, the increase was even higher, at close to 20 percent since September 2019
London, Ontario hasn’t missed out on the boom either. The housing market here is hotter than ever before. In September, the average selling price for a London, Ontario home hit $520,000, an astonishing 28 percent increase over the past year.
Low Rates and Pent Up Demand Fuel Soaring House Prices
With the economy struggling, it may be a shock to hear that housing prices are continuing to set records. So, what’s going on? For one, there is a lot of pent up demand for homes in Southwestern Ontario because people were unable to buy during the lockdown in March and April. The London area remains the second-fastest growing region in Canada, and those new residents need homes regardless of the pandemic.
Another big factor was the decision by the Bank of Canada to slash interest rates to just 0.25 percent, their lowest ever. That led to the big banks offering interest rates of less than two percent on five-year fixed-rate mortgages. Suddenly mortgages became a lot more affordable for more people.
Taken together, the low interest rates and high demand for homes in Southwestern Ontario are creating a red-hot housing market that not even a pandemic can slow down.
Should You Wait to Sell Your Home in London, Ontario?
With home prices rising so quickly, you may be tempted to wait out the pandemic and get a higher price in the future. However, if you’re expecting the same stratospheric increases to continue indefinitely, you may be disappointed. As mentioned, pent up demand from the lockdown is one factor in the price increases, but it is only a temporary factor. Second, interest rates are currently close to zero, so it would be unreasonable to expect them to go much lower.
As a result, the housing market in Southwestern Ontario, including London, will likely begin to stabilize. That means prices will continue to rise, just not at the breakneck rate we have seen this year. So, if you’re looking to sell your home for more money, now is the time to do so.
Could London, Ontario Gain from the Post-COVID Economy?
Another interesting facet of the pandemic is how it could permanently change the way people work—and, by extension, where they buy houses. A survey earlier this year by Statistics Canada found that 25 percent of Canadian businesses were planning on making remote work an option for their employees even after the pandemic ended.
In some sectors, including information and cultural industries and professional, scientific, and technical services—both of which are large in the London area—the percentage of employers who plan to make remote work permanent is nearly 50 percent. For some context, as recently as 2018 fewer than 10 percent of businesses had any remote work options.
What does that mean for selling a house in London, Ontario? For one, secondary cities like London become far more appealing for homebuyers in a world where more people work from home. Workers who were previously stuck commuting to the office in Downtown Toronto now have the option to look for homes much further away from the city. In fact, being pushed out of the Toronto housing market was already fueling demand for homes in London, a trend that is likely to increase as remote work becomes permanent.
Minimizing the risks of selling your home
All of the above suggests that, from an economic perspective, 2020 is still a great time to sell a home quickly in London and throughout Southwestern Ontario. However, you may still have concerns about whether doing so in the midst of a pandemic is safe. After all, in an age of social distancing, limiting your in-person contacts is something that can protect yourself and others.
There are definitely things you will need to keep in mind if you decide to sell during the COVID-19 pandemic. For one, how the pandemic plays out will determine whether you are even allowed to hold open houses. Currently, open houses are permitted in Southwestern Ontario, but they are still prohibited in Toronto, Ottawa, Peel, and York Regions.
Also, you or your realtor may have to take other precautions. Those could include maintaining 2-metres distance during open houses, providing personal protective equipment during viewings, disinfecting surfaces, and recording contact information of visitors for the purpose of contact tracing.
That’s a lot of work and it may put you off of trying to sell your home right now. However, there are alternatives. For example, selling your home off-market with an investor allows you to take advantage of London, Ontario’s high housing prices, while also minimizing the need for open houses, in-person viewings and other face-to-face meetings.
Furthermore, if your home is in need of repairs or renovations, you may be worried about hiring contractors who could unknowingly spread COVID-19. By selling off-market, you can sell your home in as-is condition, while worrying less about letting more people into your home.
This year has probably caused a lot of stress for you already; but selling your home shouldn’t add to your worries. Reach out to a local real estate investor in the London, Ontario area today and learn how to sell your house fast, while keeping you and your family safe.
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