There’s a story told by realtors in London, Ont. that has reached folklore status.
As Jim Smith, a Sutton Group-Select agent, tells it: a Toronto realtor once got a school bus, loaded it up with a group of potential buyers from the GTA and drove west to Forest City.
“They went into a subdivision that was nothing but sticks poking out of the ground,” he said. Soon they started buying lots.
This story has become symbolic of the London real estate market in recent years.
The average home price across the country dropped by more than four per cent in 2018 (the most in almost 25 years), while houses in London became more expensive.
For the first time in the city’s history, the average house price is above $400,000. That’s up more than 11 per cent from last year.
But it wasn’t always this way.
In the late 1980s, Smith saw a “boom” as developments popped up and families expanded, requiring larger houses. The population grew to over 310,000 in 1991 from under 270,000 in 1986 (today the population is close to 383,000).
The market stayed relatively stable through the next two decades, even as purchasing spikes and pricing surges occurred in some of Canada’s biggest markets.
By the end of 2016, the average price of a detached home in Toronto was $1.35 million, more than 32 per cent higher than the year before. Prices in the surrounding 905 region also saw spikes of more than 25 per cent.
In London and St. Thomas, homes were selling for a fraction of the price. The average cost of a detached house was still below $300,000 in 2016.
“It was just too expensive to buy in Toronto, too expensive to buy in the GTA,” said Smith. “It all boils down to affordability.”
Buyers, pushed out of the GTA’s seller’s market by inflated prices, made the drive west.
“They were coming down the 401 to buy London real estate,” said Smith. “One builder introduced 90 lots and they were sold within a week and a half.” The same builder put another 90 lots on the market soon after, which were meant to sell two years later, and they sold quickly as well.
That’s when it happened — “London started to cook,” said Smith. “In 2017, we were on fire.”
For the first six months of that year, the London St. Thomas Association of Realtors posted record sales.
With new federal rules introduced last year that require homebuyers to pass a mortgage “stress test,” London’s comparatively low prices have been underscored again. Homes in the region now cost an average of over $405,000, while houses in the Greater Toronto Area average nearly $780,000.
London-St. Thomas is among a small cohort of regions that exist as oddities in the country, where prices are still below the national average ($481,000) but climbing at a higher rate than most.
London and St. Thomas prices jumped 11.1 per cent this March while the national average dropped two per cent. Kingston and Windsor-Essex also saw similar increases in price, according to the Canadian Real Estate Association
“It’s an anomaly,” said Smith who served as president of the association in 2017. “We’re just playing catch-up with the rest of the province. [We’re] the best kept secret for value for years.”
Beyond affordable housing, London’s appeal as a place to work is increasingly attractive too.
Digital media companies are thriving in the city’s downtown core, so much so that Smith calls the city a burgeoning “tech hub.”
There are more than 300 digital creative businesses in the city. Four of them ranked among the top 500 fastest growing technology companies in North America last year.
London is also now viewed as a great place to raise a family, said Smith, noting the array of city parks, including several that stretch along the Thames River that runs through the city.
Unemployment hovers below the national average around five per cent with a diverse workforce focused in areas such as medical research, IT, manufacturing, education and insurance.
The city has also become increasingly attractive entertainment scene as recent host city for the Juno Awards of 2019. “London has finally been discovered,” said Smith.
In an increasingly popular city, a longtime realtor like Smith is an invaluable resource. There are more realtors than ever in London today, but Sutton’s trusted group of more than 125 agents, which were named “Best Real Estate Office” for eight years running by voters in the London Free Press newspaper’s “Best of London” awards, have the knowledge to ease homebuyers and sellers in the right direction.