As we step into 2025, the real estate market in London, Ontario, is facing a turbulent year. While the market has shown signs of stabilization in recent years, a variety of factors are creating uncertainty for buyers, sellers, and investors. Here’s a look at what has happened so far and what to expect as the year unfolds.

After a sudden rise in interest rates aimed at slowing the housing market, the Bank of Canada has begun to gradually lower the bank rate. However, these reductions have not been sufficient to make housing prices affordable for most people. Despite this, many major banks predict that the Bank of Canada will lower the rate to 2% by mid-year, which could provide some relief.

Shifts in Housing Supply

A noticeable trend in 2025 is the anticipated increase in homes sold by baby boomers moving into senior-based accommodations. This demographic shift is expected to add more inventory to the market. Simultaneously, we are likely to see a rise in bank sales or foreclosures, particularly as homeowners who purchased properties in 2019-2022 with fixed-rate mortgages face renewal this year.

Those who opted for fixed-payment variable mortgages may encounter the biggest financial shocks. As interest rates rose, their payments remained level, but their mortgages likely sustained their original principal amounts. Renewing these mortgages at higher interest rates will be a challenge for many.

A Busy Spring Market

Being on the ground in real estate, I can tell you that all signals indicate a busy spring market driven by pent-up demand. Buyers who were previously hesitant due to high interest rates may re-enter the market, while sellers are preparing to list their properties in hopes of capitalizing on this activity.

The "Trump Effect"

On a broader scale, geopolitical factors could also influence the Canadian economy and, by extension, the housing market. While it’s uncertain what U.S. President Trump may do, his decisions could have significant repercussions for Canada. If some of the measures he has threatened come to pass, they could be disastrous for our economy. It’s a situation worth monitoring.

Opportunities and Challenges in 2025

For Buyers:

• 2025 is shaping up to be a reasonable good time for first-time buyers. Changes to mortgage insurance rules, lowering interest rates, and increased negotiating power—especially when not competing—are all favorable conditions.
• Keep an eye on bank sales, distressed properties, and avoid listings with offer holdback dates, as these homes are likely to sell for more than others.
• Don’t overlook condos in London. Negative press about "dog crate condos" in Toronto has unfairly influenced perceptions of condos in other markets, including London. This presents a unique opportunity for buyers to enter the market.

For Sellers:

• Preparation is key. Do not underestimate the benefits of staging, professional photography, and thorough preparation when listing your home. The market will remain competitive, and gimmicks will not serve you well.
• Pricing your home realistically and working with an experienced realtor are essential to attracting serious buyers and achieving your goals.
• Because we are expecting a potentially turbulent year, I would suggest listing in the spring market. If the market slows during this year, it won't do so until after the spring market 

Either:

• Shared housing arrangements, such as roommates or granny suites, are becoming more common and offer creative solutions for affordability. I have recently split my house to rent a large portion to a family member. It has benefited both of us greatly. 

Closing Thoughts

The 2025 real estate market in London, Ontario, is filled with both challenges and opportunities. Whether you are a buyer, seller, or investor, staying informed and working with trusted professionals is crucial. 

Let’s navigate this exciting and dynamic market together. With the right strategy and support, 2025 could be your year to achieve your real estate goals!

*If you’re considering any real estate, mortgage, or investment decisions, consult with an expert who can tailor advice to your unique situation.*

Photo courtesy of Gratisography