2024 Top Real Estate Trends Shaping Guelph

Real Estate & What to Watch for in 2025

The local real estate market (Guelph, Fergus & Wellington County) was not slow-moving in 2024. There were a number of key trends influencing homebuyers, investors, and developers alike. From shifting housing preferences to new technologies, understanding these factors is essential for navigating the market in 2025. Here’s what you need to know:

1. Lower Interest Rates:

The Bank of Canada cut the bank rate 5 times in 2024, from 5.0%-3.25%, greatly reducing borrowing costs, making mortgages more affordable for some buyers. These lower rates are stimulating housing market activity and opening doors for more Canadians to enter the market. Further rate cuts anticipated in 2025 will likely result in a steady increase in sales prices as more and more buyers re-enter a tight market. What we’ll be watching will be the many thousands of fixed rate mortgages that are due to renew in 2025 and 2026. Interest rates may be down, however they are still well ahead of the Covid era rates which could make renewals challenging for many home owners and account for a lot of the insecurity in the economy and real estate market.

2. Shift in Housing Preferences:

Remote work has changed the way people think about where and how they live. Buyers have been moving away from city centres, opting for larger homes in suburban and rural areas like our local market. 2024 saw employers push back requiring employees to spend more time in the office. This trend is still evolving and it will be interesting to see who prevails. In the meantime, we’re predicting busier highways and commuter trains as home owners adapt to hybrid work and living.

3. Supply-Demand Imbalance:

Housing inventory and new construction rose across most markets in Canada. Ontario was one of the provinces where new construction starts actually fell in 2024. However, demand continues to outpace supply, especially in urban areas. This imbalance is keeping home prices high and competition fierce, especially in the mid-range detached market, making it crucial to act quickly when the right property comes along. What we’ll be watching for is how builders will shift their products to meet consumer demand which has drifted away from condo products like stacked towns and apartments.

4. Rising Construction Costs:

Higher costs for materials and labour have had a major impact on new developments. Developers are facing increased financial pressures, which has led to higher home prices. Locking in project costs early has become a priority in order to manage these rising expenses. Ironically, even with decreasing interest rates, many builders have opted to become more conservative in starting new projects given the tepid new construction market conditions during 2024. The trend to watch for here is how many builders will continue to hold back some construction in order to better match demand to their products. There are some interesting trends developing here.

5. Intraprovincial Migration:

In 2024, more than 78,000 residents left Toronto for other communities within Ontario. Over 400,000 Ontarians have left Ontario since the first quarter of 2020, indicating a substantial and sustained outflow to other provinces, with Alberta the top destination. While this will have a mitigating effect on the Ontario real estate market, Alberta is poised to experience some of Ontario’s problems in the near future. Will Ontario become the Canadian rust belt and Alberta booms again? It’ll be interesting to see how the politicians deal with this when people start voting with their feet.

6. Rental Market Growth:

With homeownership becoming less attainable for some, demand in the rental market has surged. As a result, rental prices plateaued during late 2023 and early 2024. For investors, this presents a strong opportunity to capitalize on the growing rental market, if suitable properties could be found. A trend we’re keeping an eye on: rental rates are trending down. Will more and more people remain in the rental pool especially in 2025 if home prices continue to move up?

7. Smart Home Technology:

The rise of smart home features and AI technologies is changing buyer preferences. Many house hunters are now seeking properties equipped with modern conveniences like smart thermostats, security systems, and energy-efficient appliances. AI driven research and data is making it easier to research properties, investment opportunities and make faster decisions.

8. Sustainable Housing Demand:

Eco-friendly and energy-efficient homes are more popular than ever. Buyers are prioritizing sustainability, pushing developers to focus on green building practices like solar panels, better insulation, and environmentally friendly materials. The big trend to watch will be a focus on accessory dwellings and Tiny laneway homes. Being able to add density as a right of ownership could be a game changer in 2025 if several of the above factors continue to drive prices up.

9. Commercial-to-Residential Conversions:

The trend of converting commercial properties into residential spaces is adding much-needed housing supply in urban areas. These conversions have the potential to reshape city skylines and provide innovative solutions to the housing shortage. Our prediction is that it will take several years to reach the Guelph market. Expect the concept to be proven in large urban areas with plenty of vacant, less than prime, office space.

How These Trends Are Shaping the Guelph & Wellington County Real Estate Market:

These trends are redefining the real estate market in Guelph and Southern Ontario, influencing everything from property values and buyer behaviour to development patterns and investment strategies. One thing is certain for 2025 and beyond; the local real estate market is not going to get any slower or less expensive.

Whether you’re looking to buy your first home, invest in a rental property, or develop new projects, understanding the market is key to making informed decisions.

At Keller Williams Home Group Realty, we’re committed to helping you stay ahead of the curve. Reach out to one of our knowledgeable agents to learn how you can navigate the real estate market with confidence in 2025 and beyond.

Book a Free Consultation.

Happy Friday,
Paul

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