Is it as Bad as it Feels?

The June numbers are out and depending on the metrics you want to measure or follow, it’s bad. Or at least that’s the way it might look and feel to some.

There’s no question about it: the market is sluggish.

We’ve talked about this on numerous occasions this year. There’s a feeling of malaise in the real estate world. I think partly because the market is still dealing with post covid vertigo. Buyers are still hesitant, expecting a perfect storm of reducing interest rates and continued price declines.

They may just get their wish - maybe.

Let’s look at the numbers and charts for June 2024 and compare it to the past 3 years.

June sales in Guelph were actually up by 1.1%, that's 2 extra houses compared to last year, while Fergus was down 51% and Guelph-Eramosa TWP was down 12.5% from June 2023. We didn’t include Puslinch TWP because the numbers were too low to be meaningful, and I would caution that the Guelph-Eramosa data is also too low to accurately predict.

Sales in all three areas have been relatively stable over the last 3 years. The difference and, in my opinion, the reason for the malaise in the market is that inventory levels are growing and starting to linger longer.

Listings continue to enter the market with Guelph leading the way, up 9.7% to 340 new listings in June. Fergus surprisingly saw a decrease in new listings - down 3.9% month over month. Again, this is only a difference of 2 listings. Percentages look worse when dealing with small data sets.

Overall, inventory levels continue to grow significantly, with 410 active listings in Guelph up 74.5% from the previous year. Fergus has more than double the inventory of available listings compared to June of 2023. There are 410 available listings in Guelph for buyers, which seems like a lot, and considering the number of listings in 2022, it is indeed a healthy increase in availability.

To get an even clearer picture of what the market conditions are truly like, I like to calculate the absorption rate. This number is simply the number of sales in a given period divided by the total available number of listings for the same time period. June’s absorption rate in Guelph was 46.83%, which means it would take less than 3 months to sell off all the available homes in June. Economists consider anything under 20% to be a buyers market. Even when you look at the absorption rate for Fergus and Guelph-Eramosa TWP both are over 21%. Which in my opinion means that all three markets are essentially in balanced territory, with Guelph leaning back towards a seller’s market.

So - are there opportunities out there? Or is it really as bad as it feels?

There are absolutely opportunities out there! The median sales price in Guelph was down by 8.5% to $750,000 which tells me Sellers are becoming more realistic in their pricing and motivation.

The price difference from last year means buyers now need to come up with about $14,000 less in order to get a 20% downpayment for their purchase. That difference alone will cover most of the closing costs and moving costs. Tell me that’s not a motivator for a buyer!

The challenge as I see it is that both agents and consumers are letting their limiting mindset get in the way of seeing the opportunities that are available to them. The news, typically bad because that’s what gets attention, is dominating everyone’s attention span. Mind you not everyone. There were 192 people/families that bought a home in Guelph last month, had more homes to choose from and paid about $70,000 less than they would have paid last year.

Tell me again that the market is full of bad news!!

Thanks to everyone that responded to last week’s post. I love the feedback! It fuels and reenergizes my efforts.

I’d be a horrible Realtor® if I didn’t ask about your Real Estate plans for 2024. Book a private consultation through my calendar link: https://calendly.com/homegrouprealty

Enjoy this fine weekend - summer is finally here!

Paul Fitzpatrick

Appointment Calendar: https://calendly.com/homegrouprealty

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