HALF A YEAR
This week in the Guelph real estate market we are reporting 82 properties sold, up an incredible 26% from the same week in 2019. 40 of the 82 homes (48.8%) sold at or above list price, a number that has been very consistent over the past month despite pandemic conditions still existing.
The median home selling this week was a 3 bed, 2 bath, 1411 sqft home that sold for $570,000, or $394.15/sqft. This median home took 16 days to sell, with sellers achieving 99.33% of their list price. If ever there were conditions to encourage people to list homes for sale, this would certainly be the time.
While market conditions are still pretty incredible, there are a tremendous number of questions swirling around our local real estate market for the months to follow. For the time being we at least know the demand is still substantial, and for those sellers that are jumping into the market, conditions are pretty much ideal.
As we cross the half-year point, we have our Housing Market Reports for the month of June and Q2 available for you. The timing of these reports is quite interesting. The second quarter of 2020 completely encapsulates the global pandemic, and the first quarter is roughly pre-pandemic (barring the final weeks, although at the time we had no grasp on the severity of the situation) – which allows us to compare the real estate market pre- and mid-pandemic. The June reports echo those of February and March, and tell a story of a resurging Seller’s Market, and perhaps signify the direction that the market is headed, at least for the next quarter. Find our analysis of the local markets, plus the detailed numbers below.
Stay tuned, as there are a number of chapters still to be written about the 2020 real estate market. If you have questions or want to have an in depth and honest conversation about today’s real estate market, reach out to us.
INVENTORY LEVELS & SUSTAINED PRICES
Listing inventory continues to be the greatest source of frustration for buyers and REALTORS® in our market. For the past 12 years, Guelph has consistently had less than 3 months of available homes for sale. The surrounding Tri-City area hadn’t dropped below 3 months of inventory until 2016, and now all three markets struggle to have sufficient homes to meet demand.
Low inventory levels result in increased competition – this is the major source of the multiple offer
situations we are seeing. Sustained population growth in the region, tied to positive economic growth, adds pressure to demand and further drives inventory lower and prices higher.
Pre-pandemic, the hot Seller’s Market that emerged in February was beginning to attract the attention of homeowners who had perhaps planned to sell later in the year, and instead jumped to take
advantage of the market conditions before the Spring Market. While these conditions were brought
on by low inventory levels, this sudden influx of new homes on the market showed the promise of
returning balance to the market. Until, of course, COVID-19 swept the world and put a halt to this slight upward trend in listings. Now, not only do buyers face the risks associated with a global
pandemic, but their lack of choice continues to be a challenge.
Initial expectations at the beginning of the pandemic were a freefall in prices – but that didn’t happen. While Q2 sales were down 31.5%, listings were down even more dramatically – by 34.3% – which effectively froze the market at the price levels pre-pandemic. Sellers were patient, holding off on listing their properties and some taking listings off the market temporarily; buyers, many in the middle of a deal and in desperate need of a place to live, jumped on the few opportunities that presented
themselves.
With Phase 2 of the Province reopening, buyers are back with a vengeance and have quickly adapted to the new health protocols and lack of public open houses. Today’s buyers are prepared to get pre-approvals in place, work more exclusively with REALTORS®, and they have quickly adapted to using digital alternatives for meetings, property viewings, and completing transactions.
NEW BUILDS IN THE CONDO MARKET
Condo apartments still seem to be the most volatile part of our local markets. We’re seeing larger price increases over the same period last year, possibly due to the massive increase in new and bigger
units coming on the market. The decrease in listings is on par with detached, semi-detached and
townhouses, but unlike other areas of the market, we see a disproportionate decrease in the number of sales. Specifically, resale numbers are down sharply – likely due to the new homes available that don’t get listed on the MLS® system, instead sold directly to consumer through the builder.
MOVING OUT OF THE CITY
Taking a look at Centre Wellington, Guelph/Eramosa, and Puslinch Townships, we are seeing a trend in the rising popularity of rural properties. Whether they are looking to cash in on the equity from their city homes, craving more outdoor space as a result of the stay-home orders, or their jobs have gone completely remote, buyers are moving to the country! With increases in both sales prices and the number of sales, there is no question that the pandemic has had a significant effect on the rural market. The dramatic increase in sales prices, compared to Guelph and the Tri-Cities, is likely a combination of factors. The first factor is obvious – sales prices are up across the region, a direct result of the low inventory numbers. The second driving force may be the type of properties listed – with a new influx of buyers looking to move out of the city, homeowners with larger, more expensive properties may be taking advantage of the conditions and listing their homes.
MORTGAGES, FINANCING & INTEREST RATES
Interest rates are a non-issue at the moment. While our economy is still in the beginning stages of reopening, we don’t anticipate increases for the foreseeable future. And, because interest rates are historically low, they are not an effective tool for economic stimulus during the pandemic. It will likely be well into 2021 before we hear any news on interest rates.
The Canadian Mortgage and Housing Corporation (CMHC) has been in the spotlight throughout
the pandemic, with their new mortgage qualification rules having taken effect on July 1st. Qualifying for a mortgage is getting harder, with tougher requirements and higher credit scores needed in order to score the best rates and mortgage products. The silver lining, particularly for first-time buyers, is that the CMHC chose not to increase the minimum downpayment, as many had expected.
Looming storm clouds, in that hundreds of thousands of mortgages were deferred for up to 6 months –
and those payments will need to restart come September/October. Of the homeowners that deferred in April, the question is how many will not be able to start repayment in the fall, and unfortunately be forced to sell. Depending on the answer to this question, we will potentially see a sudden spike in listing inventory, which will have a downward effect on pricing at least for the short term.
Unless our situation becomes more akin to the US, and/or the US economy craters, we don’t expect the real estate market to take any dramatic turns over the next few months. That being said, Q4 will give us a better understanding of what 2021 will look like, as we will see the full result of mortgage deferrals.
JUNE & Q2 HOUSING MARKET REPORTS – NOW AVAILABLE
Plus, two special reports that take an in-depth look at how the pandemic as affected our local market
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Featured Property
19 MEADOWLARK DRIVE
Hamilton, ON
3 BED / 1 BATH / 1,062 SQ FT
We're taking a short drive out of Guelph for this week's featured listing!
This week's favourite property is this sweet little bungalow on Hamilton Mountain. The fully updated main floor is the perfect size for young professionals & couples, or perhaps someone downsizing from their current home. With a full, unfinished basement, there is plenty of space for storage and plenty of opportunity down the road to double your finished living space. But what makes this home truly unique is outside! A full roof of solar panels means no hydro bill for this home's owners – yes, you heard right! You will also love the meticulous landscaping front and back, the incredible backyard space (fully fenced!), plus a hot tub for relaxing and entertaining.
View this home virtually & contact the listing agents for more information.
Listed by:
Amelia Burke-Filewod, Real Estate Broker
(519) 222-1134
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