December 02, 2022

The Year-in-Review

Back in Issue 290 That was a Year, we made some pretty bold prediction around the Guelph real estate market.

We predicted that the market would remain frothy, and that sales would be up again this year. The first couple of months would certainly suggest that would be the case. We’ve got to say though that there was this sense of foreboding, especially as the median price in Guelph approached the $1 million price point.

Well, much like when the pandemic started we could see the warning signs, we just didn’t really understand the scale of the storm about to hit. The real estate market change was sudden and impactful. As of November 30 2022, home sales in the city of Guelph were 1,992 for the 12 month period. Down 25.9% compared to the previous year (November 2021) -the last time sales dipped annually below 2000 units was Q2 of 2011.

Score that prediction as a fail.

Inventory Levels will remain at record low levels.

We called for inventory levels to remain at 1 month or less. As of November 30, that was 1.2 months of inventory. Still that’s up 140%, yes you read that right, over the November 2021 period. You would have to go back to Q1-Q3 of 2017 to see inventory levels below 1 month. Despite almost doubling inventory, levels are still at historic lows. Slowly climbing towards 1.5 months of supply, we’re not hopeful about inventory levels getting back to normal just yet.

Score that prediction as a win.

Multiple offers will be the normal way most properties sell.

I must have been wearing the rose coloured glasses that day. Multiple offers are still happening but are now very much an outlier event. Offers are being presented and negotiated and just like the old days pre 2016, there are even conditions in offers now. We’ve had to train a lot of our new agents that conditional offers are the norm, not the exception. We’re glad those crazy days are behind us and we’ll accept the fail on this prediction.

There will be double digit price increases again this year.

Despite the market pullback, where the average sales price peaked in August at $895,544 ( reflects the 12 month period ending August 30). November's average sales price for the year had dropped to $882,225 which is still a 16% increase over the previous 12 month period ending November 2021.

The slope on that graph is pointed downward and I imagine we’re still in for some price pullback.

Score that prediction as a win.

Interest rates will increase this year.

That was a gimme! We knew the BoC had to increase rates. I think the shock was the size of the increases and the frequency of them. There was no questioning their intention to get inflation back as close to 2% as possible. We’re not there yet. The trend is in the right direction.

Expect another increase next week.

Prediction- win.

Sellers will be reluctant to list their homes.

This was one that I truly hoped I was wrong on. If we saw a significant increase in homes for sale, prices would have dropped sooner and possibly had a positive impact on reducing inflation. It didn’t happen. New listings on the market peaked at 3400 in May of 2021 from a low of 2754 in June of 2020. January of this year started well below the 2021 peak with a 12 month total of 3124 homes being listed and built up to 3319 for the 12 month rolling period ending in November. We saw an increased number of homes, but nothing like the run up in 2021 where it seemed a year's worth of listings hit the market in 3 months. Despite the number of homes being listed was still well above the long term average, the supply has still not caught up with demand and the population growth in this area.

I’ll take the win on the prediction, but my sense is that homeowners are still reluctant to list.

Our biggest prediction was that the market would be rough and frothy. That prediction was accurate on just about every level and continues to be rough on all the market players today.

Up next week we will sift through the November numbers and start putting our predictions together for 2023.

Best advice for the moment? Keep your seatbelts on for now. There are opportunities out there and it will take patience and nerves of steel to find and get the gems.

Don’t forget, we are hosting the Guelph Junction Christmas market Saturday from 3-8pm in our office parking lot. We’ve got some great craft vendors lined up. This will be the perfect show to find the ideal unique gift for your loved ones.

Enjoy the weekend.

Paul

CHECK IT OUT! WE’VE JUST RELEASED OUR

OCTOBER 2022 MARKET REPORT

THIS REPORT CONTAINS

October summary & analysis for Guelph
Neighbourhood breakdown for Guelph
Full home type breakdowns for Guelph, Kitchener, Waterloo & Cambridge