Market update: London and Area


Justin Konikow

Francois: So, tonight we're starting with Justin Konikow, Justin is one of the owners of Prime Real Estate Brokerage and Prime Media Productions. Justin founded the company with his wife, Shannon. With the intent of turning the industry upside down. And I really think that's happening they are coming at things from a completely fresh perspective using his platform and networks for the brand, he quickly became one of the biggest household names in real estate with over 60 million in sales last year alone. And being involved in over 200 transactions. 

Justin is privy to some interesting insights and industry tips through their media company and excels at content production. And they focus on branding and sales and they partner with some of the top names in the industry.

He is also the founder of the industry syndicate, a podcasting network, comprising 26 shows. With a listenership cresting 300,000 a month. So, tonight we're focusing on Southwestern Ontario and Justin you're in the London area. So what do we need to know about trends in London?

Justin: Definitely. I appreciate that introduction for us a lot, a couple of things, one, the industry syndicate network, that's actually now we're comprised of a pile of us original founders. So there's people in the states, people in Canada, and we identify that there was a global network happening. So really getting some ideas and insights from strategies across the border, implementing them in our market.

It was founded by Dustin Brohm and Phil Treadwell, myself and a few others too originally. So, great podcast if you're looking for information. 

I have actually removed production from my bio.

So, you guys got a little glimmer, but I can tell you that we've experienced a lot of growth since then, too. So things have changed and I think that's an indication of the trends in London. And when I say that line that we're looking to flip the industry on its head. Pretty much anyone that opens any business likes to say that we really took a different approach in terms of creating a consultant firm versus a real estate brokerage.

So to give a little bit of context to the presentation, I'm going to show you guys, my wife is an integral part she is the brains of the operation. MBA educated from the Ivy school of business, ran a consulting company in Yorkville came from a service business background, myself too. I came from a professional background in marketing and advertising.

I was the marketing and communications director for one of the largest chains of restaurants in the London area. So not your typical real estate story, and we wanted a better solution for the industry. I found when I was buying real estate, the agent would set up a portal, I'd find my own property. They opened the door and they got paid and it wasn't really much for me.

So we wanted to create something better on both the purchase and the list side. So just a little bit of context to how we're actually different and it starts with analytics. So what I'm going to do is I'm going to share my screen first, and I really want to get to the nuggets for everybody and feel free to add as much as you want in the comments.

Are you able to see this beach here?

Francois: Yes. 

Justin: That is Grand Bend, Ontario. So if anybody's looking to invest in cottage properties, we do that. So this is actually about six minutes from where I live. And I'll get to that in a second and why that matters. So that beach is actually right here. So if you're looking at this territory map, you're looking at the GTA or the monster as we like to call it where we are here in little old London, Ontario. And then if you look at this territory, this is our territory, Kitchener to Sarnia Lake Huron to Lake Erie. I like to coin the phrase, the GLA, so the Greater London Areas, what we are going to be talking about the board that manages statistics and real estate transactions for our area.

Actually covers this whole area. So the stats and demographics, I'm going to show you actually cover this whole area. We can get into the minutia. Obviously London is heavy on people's radar. So as I go to the London area, you can see how much it's actually grown. On the other big note, I want everybody to take is if you're actively investing.

One of my areas is right now, couple of reasons, probably the biggest one is Amazon is actually setting up. So fun little fact for people. I don't know if you heard, but Amazon is actually building a large warehouse. The reason I had this information before anybody else share another photo with you, and this is insider information.

This is me when I was a kid, the guy in the white jacket, this is Anthony Broccolini. So if you know the Broccolini family, they're the largest builders in Montreal. They built the Amazon facility. So I actually called Anthony when I heard the rumors and I asked him and I said, are you coming to London?

He said, sure. He is setting up shop in Talbot Ville. So it looks like they're building a city. Why that matters is the proximity of businesses that come because of Amazon or the real key Amazon doesn't actually employ a lot of people, but logistic services and everything else are super important. And why they chose this location proximity to the 401, the 402 highway, the actual lake, and then the rail that we have.

So we have CP and we have CN. So from a logistical standpoint, London and surrounding area is set up to be a primary driver for all things industrial. And if anybody's been watching the industrial market, it's a little bit hectic. There's also another key project happening in St. Thomas, right at the core heart of it.

There's a gentleman by the name of Jeff House and Diana House are developers. Jeff actually is employed at my brokerage and has his license parked there. He essentially is more of a developer, than agent. He's not really an active agent anymore. They do a lot. They do money lending and all kinds of other things too, but they are doing a sick development, residential commercial, right in the heart of St. Thomas. So shout out to Jeff and Diana House, probably one of the coolest projects I've seen and seeing young people in our demographic, really taking charge in a market like St. Thomas. The sky's the limit. I'm going to say you're probably 15% cheaper than London, much less restrictive in terms of investing opportunity.

So those are the trends that we're seeing in St. Thomas back over to London. So London, overview, I got to give you a little bit of a high level in terms of how it's grown over say the last five years. And I'll do that with the info sparks graph so I'm just going back a year here to give you some perspective.

Look at the price here. Average sale price 470 average sale price is 660 that's one year of growth in London, back in 2013. The average price was 275.

Francois: That's a Go train starting in London. That's going to just find even more.

Justin: For sure. But I liked this graph for trends. It really showcases look at February, right?

This is the median sales price. Look at it, spike in March and look at it. And look at it spike and look at it, drop and look at a drop and how it stabilizes. Interesting. Price has always gone up maybe year on year. This is going to stabilize, but if you look at the new listings on the market, now you notice in March, there's a lot of new listings.

It dropped down to June, dropped down in July. And if I look at days on market, same thing, cropped up April, March, May, June days on market going up. And if you go back to the content we were putting out in June, we were indicating that we were changing our listing strategy and our strategies based on what was happening week by week, because we saw the spikes in inventory.

A lot of agents were cocky thinking, oh, everything's selling multiple offers a hundred over asking price. We can price it low well they were caught holding the bag. When their sellers didn't get what they wanted. And then they were like what are you doing? Raise the price and then it didn't sell.

They canceled listings. And it's funny. Cause a lot of those sellers are now calling me to relist their properties because they went through a sales cycle and they've got caught in that little pocket. But we are noticing, look at this, days on market stabilized August. So now we're stabilized with the lack of inventory.

You're going to be seeing these average days on market go down because there's less actual properties on the market. And the last graph I want to show you is months of supply. So if we stopped listing properties tomorrow, how long it would take before we had no properties left for sale, and you can see how January it was at an all time low.

So 0.6. So almost two weeks of inventory left in the entire market really went up to June, but it's on its trajectory down. I also like to point people, if you want to stay in tune in the London market, you can go to L star as well. That's our board and they have a section called market updates and they give some good stats in terms of average price points, trends.

If you want to get a little bit more dialed in on the areas and average price points, this shows you look St. Thomas average price 503, so very different than London, and also the average price in August, sorry, last year to this year. So St. Thomas only went up to 566 and meanwhile, if you look at, say London north, you went from 697 to 732.

It balances out a little bit. I would be a little bit cautious about looking at data like this, though. They're posting data. I'll go to the headline best August for St. Thomas home sales started apartments, but what's going to happen when that spike and flip in the market happens. And they say we didn't have as good of a September as we thought, because the homes that sold and July and August were in that little kind of recession, not recession, but the little dip in the marketplace.

That's why data like this, good from a macro economic perspective, but it's 60 to 90 days old because by the time the transactions have processed and hit the board, we know in the investment world that it's what you're actually writing today. And this week that actually matters. So make sure you're super dialed in on that standpoint, going back to London.

So, that's the trends that you saw for the last call it five years. There's been a massive land shortage in the city. So throughout the whole proximity of the urban growth boundary was at its max London's goal was influenced by intensification. Yeah, a lot of developers and builders were submitting.

Planning applications are getting shut down because of the typical government procedure of wanting to win the votes and their constituency. And then they went to OMB and then brought the projects online. This is where there is an opportunity for investors right now. Twofold, one from your typical investing standpoint, the BRRRR strategy buying multi-families there's good inventory that you can go after and you can make it work.

If you get it for the right price, we're still doing deals every single week and finding really good opportunities that are overlooked because people are thinking they're just stale. Some of our best listings are ones that have been in the market for six months, just not marketed or priced properly.

The other opportunity is now. We're getting first access to a lot of projects where people are investing in pre-construction, which you probably understand London doesn't understand because it hasn't really existed in our marketplace until the last couple years. Give you an idea. So if I go a little bit further out and let's go back to St. Thomas, there's a little town called Port Stanley, and I'll give you a case study.

Port Stanley is a beautiful beach, Just look at it, but it's a sleepy little resort town. Nobody just thinks about investing in Port Stanley.

There's a project right here called Landings Port Stanley. So this site here, this entire site, as we'll pull it up.

Look at the river, look at the beach. It is very dynamic. They did Hafez Park, they built a huge peer you've beautiful beach from properties. There's a lot to do in your proximity to London's only, 40 minutes and change.

And your proximity to St. Thomas is very close, but I'm taking you back to this site for an actual case. So this is Port Stanley, right? So we were managing this entire site for. And this is what they were building. This was the first product we sold blown up on my screen, man. They didn't have these renderings from our company.

They would have been a little bit better, but these were the original renderings that they did. And we were selling these side-by-side bungalows and the 350 range when we launched. So side by side about, 1100, 1200 square feet bungalows in the 350 range. If you put a $10,000 deposit down on these they're now selling for $525,000.

So my brother and I would have blocked them all. If I could have my brother-in-law bought one, for example. And before he closed, the value of the thing was $500,000. So, it is something that we're watching. We're being very careful about which builders and which developers we are looking at their projects, because a lot of them haven't really experienced this before.

And some of them are taking reservations and not necessarily executing at the capacity that some people should be executing. And, we have access to some of the most interesting developers in London that are doing projects, they kept everything. We've also been watching them very closely for London when they start building apartment buildings, that they're going to start selling off units.

That's when we get very curious, right. And there's a townhouse project that we just got told we got first access to. And then another building going up where the developer is an old friend of mine from the school days. And I had a good chat with his wife when I saw them on vacation. And I said, we have investors looking for alternative vehicles.

Maybe they don't want multifamily right now. They want something a little bit more passive. When you do a launch, when you launch phase one, can you give us 5 to 10 units? And we've been having those conversations for a long time. 

Going back to, how do you find success in our marketplace? I think it's pivoting and understanding that it is a moving target and there are weeks where we'll tell you don't invest right now, or the products that are out there. It's just not the right climate to be bidding and writing offers on stuff.

And then there's other weeks. Every investor gets tired and then there's a great opportunity to pounce, but it's property by opportunities specific. And it has a lot to do with the market timing and what we're seeing in terms of the waves that you have to ride in real estate.

And I guess I should mention Grand Bend is like that as well, too.

So Grand Bend's gone through a massive redevelopment. So I, whoever has no clue or hasn't heard it in the news, had a couple of major players out of Mississauga come in and buy up half the strip. So two primary developers came in. One owns a Stringer franchise. About half the street, another gentleman from London that hasn't deep ties came in and bought the other.

And they're redeveloping it. They've both I know are looking at imposing some rules around Airbnb. I read grand. Ben has talked about attacks to Airbnb owners, property owners, mainly I think it's driven by the hospitality industry because they feel it's unfair that they don't have to pay a tax that maybe the hospitality people do, or they're looking for a way to use the Airbnb rentals to build a tourism fund for the city, I've talked to a lot of people that think that's a good idea, and I've told them why they shouldn't do that and why the free market shouldn't be the free market. And, I'm curious to see if they're going to implement it, but I haven't seen anything or heard anything.

I would say definitely keep your eye on St. Thomas. I think that's a great opportunity, but understand St. Thomas, like you go two streets the wrong way. So, I understand where you're actually investing. Mainly because of the upside of all the investment happening in the area, but then also, because it'd be ease of doing business, they don't have rental licensing like London does.

There are a lot easier to deal with when it comes to zoning out in secondary suites, which leads me to my secondary suites. We jumped on that about four years ago with a couple investors before the product exists. And again, I'm talking about, mindset is everything.

Being able to adapt to what nobody's doing is a key for investors. So, look for opportunities that maybe you don't see in the areas you're investing in right now and bring those ideas to that market. The challenge with that initially was on the refiles. The banks didn't know what to do. Because the product, no comparables, but fun fact about London, it's the biggest, smallest town you've ever seen.

So, I used to work with Bob Lyons who runs the largest appraisal company in London. So we sat down with them and we reverse engineered it. And we said, what would you need to validate an appraisal? And he was very transparent and we want it to do it the right way. So we reverse engineered it. I don't know if Darcy DaSilva, but he actually has a template on his website for free.

That gives you a really good structure on how to do a refund. He's the guy that we were doing those with initially. And then. I would also say there's really good opportunities and regular multifamily people are just, it's the same conversation that we hear, I want to invest in London, but the market's so crazy right now.

I'm like cool story. That's great. I understand. That's what everybody's saying, but why is it that we're still having success? It's because we're analyzing the opportunities one at a time we fit in the model. If it works. If it doesn't and we're not getting sensitive about it.

Francois: And London again, I'm comparing with Ottawa, but London is a lot where it's allowing basement suites, but then can you in Ottawa tip here is you can turn your house into a duplex. Then you have a big lot. You can add another, a garden suite in the back. Now you have a triplex. I don't know if London allows similar things.

Justin: Great question, and I'll give you an answer. That is all the value for everybody that showed up to this. Yes, technically, they have the same thing in London, but they have made it so restrictive.

It will not make any sense for you to. So, looking at the policy that's in place, there's no way you're going to do it. The setbacks aren't going to work, the square footage isn't going to work. You're not going to be able to make it quantifiable to add enough value to actually warrant the carriage house that you're going to add.

Francois: So what's the best way to get a hold of you and to take advantage of these tips. I know it's being shared in the chat, but what do you recommend for investors?

Justin: Yeah, I was going to say, you know how to get a hold of me. You go on Instagram and you send me a DM. We've got a really good team.

And actually my Instagram has me directly. So, I have a communications manager that handles a lot on the back end. My team is incredible. I know you guys know Lindsay Gala and she's on my team as well. And there's some incredible specialists that do a lot of different things. Reach out, ask us any question.

We're the anti sales salespeople. So, we're not going to pitch you anything. We're not going to try and sell you anything out of the gate. We'll develop a relationship and if we can add value to your life. Great. And just, yeah. Send me a message.