The Good, the Bad, & the Ugly: The July Numbers

July wasn’t the best month in the local real estate universe.

There I said it.

Despite the hype of interest rate cuts and building inventory levels, the Guelph and regional real estate market remains seemingly moribund (there’s your word of the week).

Depending on which side of the transaction you sit on, the numbers will spell out different things. The overall sales numbers in the city of Guelph were down 9.3% in July compared to July 2023, and the median sales price was down again to $715,000 (down 6.2%) compared to July of 2023. This spells bad news from a seller’s perspective, but is good news if you are a buyer sitting on the sidelines waiting for lower prices and an opportunity to jump into the market.

So what’s driving this negativity besides the summer weather?

Inventory levels are continuing to build. In Guelph, 333 homes were listed in July, up 24.3% from July 2023. This built on an already growing inventory of homes. Buyers in Guelph had 421 homes to choose from in July, up 69% from the previous July. Combined these two metrics contributed to the number of days a house sat on the market rising to 17, up from 13, and the aforementioned drop in the median sales price and number of sales.

There is actually some good news in these statistics. Compared to July 2022, the median sales price of homes is still $16K higher today than 2 years ago. Inventory levels are healthier which also means buyers have more homes to choose from and the market as a whole is much more relaxed.

What do these numbers mean to you?

If you are a buyer, sitting on the sidelines, you have a nicely stocked pond to be fishing from. Prices are nudging down as sellers fine tune their pricing and become more motivated to sell. There is more inventory to choose from. Not so much that you have unlimited choices or that I would expect further large scale cuts in listing prices. Interest rates are slowly inching their way down, which will help with affordability. However, any wholesale drops in interest rates runs the risk that everyone rushes into the market, which will trigger prices to start moving up again.

I’m advising my buyers to take advantage of the choice in the market now, negotiate your best deal, and know that if rates drop further, most lenders will honour a lower mortgage rate up to 5 days before closing. Don’t run the risk of having to pay more for your next home, or worse, competing for it just to save ½% on your mortgage rate.

If you are a seller - leave 2023 in your rearview mirror. Those prices are not coming back anytime soon.

If you bought before 2019 you are still in a golden position. If you’re downsizing, I don’t know that it will get any better than now. Good demand for move up homes and a good supply of buyers that are attracted to homes that are well priced, well cared for and in decent neighbourhoods.

There is a fine line in the market for you as a seller, especially in the $900K+ range. You have above average inventory, days on market stretching out, and even a 1% cut in mortgage rates won’t adjust affordability significantly enough to drive prices back to previous levels. Looking at the big picture as a seller, I want to be in the sweet spot of selling before most of my competition and be able to negotiate from high ground. You can’t do that if your house is overpriced and not presented or marketed properly.

As Warren Buffet has been known to say, “Be fearful when others are greedy, and be greedy when others are fearful”. There’s a lot of opportunity in this market for those willing to dig for it. Working with the right agent is the way to go.

Enjoy the weekend!

Paul

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