London, Ontario’s Detached House Market's Continued Descent

London, Ontario’s detached housing market remains in a steady retreat. Prices have now fallen 22% from their pandemic-era peak of $839,000 in spring 2022. The benchmark detached house currently sells for $651,500, with the median at $649,900.

Both metrics have edged lower over the past three months, down 2% and 1% respectively. Though the annual decline is less dramatic, only 0.4%, the three-month trend indicates that the correction is not yet over.

This is not a sudden collapse, but rather a drawn-out decline. Over the past year, the market has drifted sideways. In the past three months, it has resumed its downward trend. This behaviour is characteristic of a market correction rather than a crash. Prices tend to fall slowly in real terms, often interrupted by periods of stagnation or false recoveries. The underlying direction, however, remains down.

Buyers Hold the Upper Hand

While the London housing market is officially classified as “balanced,” the practical reality is tipping in favour of buyers. Inventory is climbing. Active listings rose 39% year-on-year in May, reaching 2,346 houses on the market. At the same time, purchases are sliding. Just 551 detached homes changed hands that month, down from 594 in May 2024, a 7% drop.

The result is a notable increase in months of inventory, which has jumped from 2.8 to 4.3 over the past year. This 54% rise indicates that homes are sitting on the market for longer, a clear sign of softening demand. Sellers have more competition, and buyers are negotiating from a stronger position.

The Construction Mismatch

The city’s housing pipeline adds another layer of complexity. New detached home construction has slowed dramatically, with only 360 houses currently under construction, well below the three-year average of 800. This pullback reflects the shift in demand and rising costs in the low-rise segment.

Yet apartment construction is booming. Over 4,700 apartments are under development across the city. In isolation, this might seem like progress. But only 550 apartments were sold in all of 2025. Unless immigration or investor activity picks up substantially, London risks an oversupply of rental and condo units by late 2025 or early 2026. Such an imbalance could trigger price cuts and rising vacancy rates in the multi-unit sector.

A Trough Still Out of Reach

Spring is usually the busiest season for Canadian real estate. This year, it failed to bring relief. The hoped-for bottom did not materialise. Instead, sales slowed and prices dipped further. Summer and fall typically bring even less activity. Unless economic conditions change or interest rates fall dramatically, the market is likely to continue weakening.

That presents an opportunity for patient buyers. But it also creates a dilemma. If further price declines are expected, some will continue to wait. This “buyer paralysis” can itself accelerate the correction. Sellers unwilling or unable to reduce their asking prices will be left behind.

The Long Correction Ahead

London is not unique. Markets across Canada are adjusting after years of froth. But the pace and shape of this correction reflect local dynamics. The city experienced outsized gains during the pandemic, fuelled by cheap credit, remote work, and migration from more expensive urban centres. As those tailwinds fade, prices are reverting to more sustainable levels.

This adjustment is not yet complete. The numbers point to continued softness through the rest of 2025. Further price concessions are likely, especially if economic uncertainty persists. Buyers have time. Sellers will need to be realistic. The bottom, for now, remains somewhere ahead.