GROWTH PATTERNS

We all know the local real estate market has been red hot this year – the multiple offers and the incredible bids over list price. A lot of people are concerned about the affordability of this market, and there are many that say this market can’t possibly be sustainable and we might just be in a real estate bubble.

It has even been suggested that these market conditions are a direct result of the pandemic, and that once contained, this market will deflate like a worn out tire.

Maybe.

The pandemic, in our opinion, has merely magnified a trend that has been growing over the past 7 years. Look to 2013 as the year that this trend became clear. The 4 years leading up to 2017 showed above average home sales in Guelph, peaking in May of 2017 with 287 homes sold that month.

The market pulled back and sales dropped, bottoming out at 86 homes sold in December of 2018. 2019 showed sales recovering, but not to the same level of sales during the 2013–2017 era.

April sales in Guelph typically average over 200 homes sold. In April of 2020, 78 homes sold! That’s the effect of the first lockdown. Not a surprise, as we all remember the sudden and very frightening news.

The speed of the recovery in the real estate market in May, and for the balance of 2020, was nothing short of incredible. However, the level of sales was still not above the sales in 2016 and 2017. The Guelph market, in 2021, has not only caught up with these activity levels, but it has surpassed the previous sales peak of May 2017.

So is this market sustainable?

In some aspects, this market has the legs to continue growing. Though not at a double digit pace, by any stretch of the imagination. Healthy single-digit growth – like the historical growth for this region – is what we expect to see.

The key indicators that we are watching closely are the Housing Affordability Index, which has been dropping significantly over the past 3 quarters. Housing becomes more affordable as the index number increases; the chart below shows a steady decline from late 2019.

We’ll also be watching the inventory of homes available for sale. Despite the higher level of new listings, sales have been increasing as well, which means growth is slow in terms of building an adequate reserve of available homes.

I call it the quantitative easing for the Guelph housing market. When inventory levels build up, pricing will ease in the marketplace, allowing the the affordability index to level out and balance to be restored to the market without causing it to collapse.

The key question here is: where is the inventory going to come from? We will explore that in detail over the next few weeks. The April stats report will also be released next week, and my expectation is that we’ll start to see some aspects of the market starting to settle into a more sustainable growth pattern.

THE PAST WEEK IN THE GUELPH REAL ESTATE MARKET

This past week in our local market, 66 homes were sold. As we continue to look at the past week in reference to three key weeks – the same week in 2019 and 2020, plus the previous week this year – it’s interesting to note that we’re heading in to tradition Spring Market season, while in 2020 we were in the midst of a startling pause in the market as we entered the unknown. It’s interesting to note that, while in the depths of another lockdown, this year so far has continued to show strength in terms of pricing and activity.

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GUELPH, ON

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Contact listing agents for inquiries & showings:

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Join us next weekend for a fun-filled evening in support of a wonderful organization!

Community of Hearts’ 6th annual Comedy Night Fundraiser is back – with a fresh twist! Join us for improv games, headline act Bad Dog Theatre, raffles, local treats & more!

The event is PG-13 and tickets are per household, so get the whole family together for an early Mother’s Day celebration!

EVENT INFO & TICKETS

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