BOOM, BUST OR WHAT?
Depending on the source, a real estate bubble has either just popped or the market is just in the seventh inning stretch. Yes, now that hockey is done for the season, it’s time to flip sports analogies.
It’s part of my role as the Broker of Record and senior management for our team to monitor the market conditions and try to make sense of our local real estate market. I follow a lot of blogs and media outlets that have a variety of perspectives, from the local, provincial, national and even international levels. Some of them are deeply fatalistic about the real estate market, while others are blissfully optimistic. Like anything in life, the key to finding what most resembles the “truth” is wading through the competing stories and opposite ideals, and focusing on the facts.
Last week we released our Q2 Market Report, an in-depth analysis of the year so far in our local market. It’s safe to say it’s been a heck of a ride so far this year, and if you haven’t yet read the report, we encourage you to take a look.
The charts below show the 12 year history of sales for the four major urban markets in our regions. March 2021 was unprecedented in terms of the number of sales and, of course, the number of competing offers and skyrocketing prices. It's a story that will no doubt be studied extensively over the coming years: who would have predicted that, during the height of a pandemic, the demand for housing would be so great?
The current perception is that the market has slowed considerably over the past 45 days. Many are calling this the beginning of the market deflating. That is, if you believe we are in a bubble.
Others see this as a respite before the market ramps back up for the Fall – which is probably closer to the truth. This summer, in our opinion, the real estate market is looking more like it normally has in the past. June, July and August see slower sales as people take time off to enjoy the short Ontario summer. June is the busiest month for closing deals. People are using the good weather to move, renovate and relax – which is something I think we can all use more of.
Our areas of concern are less around precipitous price drops, and more around finding more homes to sell. Over the past 20 years, the demand for homes has been growing faster than we’ve been able to grow the supply. Millennials entering peak home buying years, Boomers staying put and not downsizing as fast as expected, and healthy immigration of well-educated new Canadians that are very quick to catch the real estate bug.
Short of fast-rising mortgage rates combined with job loss and confidence in the economy, we don’t see real estate in the Southern Ontario market decreasing in popularity or price any time soon.
Having said that, our prediction is that future growth in prices will likely be single digit increases versus the 30+% increases that we’ve seen over the past two years.
Our impression is that the pandemic coupled with a generation of young buyers eager to build wealth through real estate and a determination to find a way into the local real estate market will keep demand strong. These new buyers want a tangible asset with long-term growth potential, and does double duty providing a home.
If you’re anything like me, that feeling of pride you get from owning your home adds an additional return that no stock or mutual funds can provide. If anything, the pandemic has reinforced in everyone’s minds how critical a safe environment is and that having control – that is, ownership – of your own space has become the highest priority.
The demand for real estate has been growing for decades. The growth in real estate supply has not kept up with this growing population and demand. That’s the primary reason why we believe the higher prices and paucity of available homes will continue for the foreseeable future. Governments like to find short-term solutions to long-term issues. Creating stress tests for buyers, increasing the amount of downpayment needed, or increasing mortgage rates will do nothing to alleviate the lack of supply in our housing market.
We face challenges on getting new developments approved, in-fill sites face incredible obstacles from municipalities and neighbourhoods, and the time required to get approvals all add to additional cost and frustration for homebuyers.
There are innovative solutions to our housing challenges. It will require all stakeholders to rethink how we will proceed in the future to house everyone.
Find our full JUNE 2021 MARKET REPORT below:
This monthly report includes:
Year-to-date and quarterly stats for Guelph, Kitchener, Waterloo & Cambridge
Sales stats for all Guelph home types
Price breakdowns for all 18 Guelph neighbourhoods
Township comparisons: Puslinch, Guelph/Eramosa, and Centre Wellington
Freehold & condo breakdowns for Guelph, Kitchener, Waterloo & Cambridge
View the new sales reports at soldinguelph.ca
We’ve upgraded our sales reports! View the same weekly sales data you’re used to, with the addition of photos, maps & property details – imagine realtor.ca, but for sold properties! To access these new reports, you’ll just need to set up a login – it takes less than 2 minutes, and you can access the reports any day of the week!
HOW TO CREATE YOUR ACCOUNT
Sign up using the email address you have subscribed to our blog with
You will receive an email – click the longer link in that email
On the page that opens, click “Log In” and create a password, confirm your password, and click “Submit”
HOW TO ACCESS THE REPORTS
Once you are logged in, click the “Menu” button in the top right corner. All of the reports you’re used to are available here, but instead of PDF reports, you’ll notice they look much like Realtor.ca property listings. Feel free to explore the new features of the site, and let us know your feedback.
THE PAST WEEK IN THE GUELPH REAL ESTATE MARKET
Typical activity levels have returned after a quiet market last week, with 49 homes sold in the city of Guelph. Last week, we noted that for the first time this year, the sale to list price ratio sat just above 100%, with only half of the listings selling at or above the list price! As you’ll read in our June 2021 Market Report, the gap between list prices and sale prices is beginning to narrow again. Of course, in true 2021 fashion, this past week saw a sale to list price ratio nearly 7% higher than last week, and 39 of 49 homes sold at or above list (that’s 80%). Take a look at the full key week comparison below:
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