A Tale of the Tape: The November Numbers - Issue 390

The November Numbers are in!

There were 101 homes sold in the City of Guelph - a 6.5% decrease over the November 2022 numbers. Over the past 13 years, home sales in Guelph have averaged 188 homes per month, marking a significant drop in November’s results compared to the historical average.

Meanwhile, the number of homes available for sale in Guelph has steadily increased from 54 in 2021 to 322 homes available in November 2023. Climbing inventory and decreasing sales are key indicators of a market shifting to favour buyers. But is that the whole story or is there more to it?

Interest rates have certainly contributed to the decreasing sales as have the stubbornly high prices Sellers are still holding out for. Of course, this is also traditionally the slowest sales period in the real estate calendar as we inch closer & closer to the holiday season.

And you can’t ignore the recent Bank of Canada announcement that took place this past week on December 6th. This was the final interest rate announcement of the year, and the decision was made to keep the interest rate steady at 5.00%. While this was expected, the Bank of Canada released a statement saying though the rates were holding, there is still concern about inflation and it is prepared to raise its policy rate further if needed. The next rate announcement will take place January 24th, 2024, leaving many waiting for any coming sign of rate relief before making a move in the market.

Click here to read the full rate announcement summary

Add in this healthy dose of fear on both sides of the transaction, and you end up with a market much like today and what we experienced at the onset of the pandemic.

Fear has frozen the market into inaction. The interest rates have clearly restrained spending - just take a look at the many listings sitting on the market for months, collecting dust.

In the minds of most people, the safest path is also an easy one - just don’t do anything.

Buyers - interest rates too high to afford the house you want? Rather than look at something more economical, sit tight and convince yourself that you can save your way into the market.

Sellers - not getting the price you want? Keep the price where it is, watch the potential buyers come through the home - if they come at all - and then go down the street and buy the home priced to current market conditions.

I’ve witnessed conditions like this over the past 35 years. My experience has given me the advantage of recognizing the pattern ahead of most of my competitors. According to the Ontario Real Estate Association, the average Realtor in Ontario has been in the industry for 7.3 years. This is an industry with a lot of turnover (approaching 30% annually). The challenge is that most Realtors in Guelph, and in the province for that matter, have never experienced anything other than a rising, fast paced market and don’t necessarily have the level of experience to advise their clients what it’s like to try and buy or sell a home in a market that is at a standstill. That’s not to say they aren’t capable of figuring it out - there may just be a time lag for a number of agents and consumers as they figure out the right strategy to tackle this market.

My goal with this post is to share that there are opportunities in the marketplace and that these opportunities take a bit of time and effort to expose.

Going back to the long term average number of sales each month - Guelph averaged 188 homes per month over the last 13 years. The opportunity here is that regardless of the current market conditions, there will always be people that need to sell. Newly wed, newly dead, job change, divorce, good news and bad news - homes are a direct reflection on the current personal lives of the people that own the home.

Sales will continue regardless of the interest rates, the economy, or any pandemics. The past 3 years have proven this to be true.

For those that can get past the fear and apprehension that currently dominates the market place, the opportunities will surface. This I see as true for Buyers and Sellers alike.

A motivated seller in this market will have to start thinking like Wayne Gretsky and skate to where the puck will be as opposed to where it is right this instant. This market for the next 12-18 months will not favour defensive players.

According to the Canadian Bankers Association, of the over 2 million mortgages currently registered in Ontario just over 2,000 are in arrears (0.10%). The mortgage arrears rate tends to hover around 0.25% to 0.35% of mortgages.

Factor in the large percentage of mortgages that will renew in the next 12-18 months and there should be some interesting opportunities for buyers and investors alike. Do I see massive price decreases in the near future? Not necessarily. A lot of this future potential will be determined by the number of homes that come onto the market because they can’t get a renewal or can’t afford the new payments.

There is a ton of information like this to analyze when we work with buyers and sellers individually. We lean on information like this to craft strategies that will put our clients in the most beneficial position.

We’ll be here to help solve your housing needs regardless of the market conditions. Just because the market may be frozen, does not mean us Realtors are.

A special thanks to Alec Bowes at Axiom Mortgage Solutions for sharing resources and insight into what’s happening on the mortgage scene. Reach out to him with any of your mortgage questions or to get guidance through your mortgage process.

connect with Alec Bowes

Fear shouldn’t have a place in the housing market.

Let’s get the discussion started.

Thanks for reading.

Paul

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