SPRING THAW
It’s Day 46 of our isolation and I think we are starting to see the light at the end of this pandemic tunnel. I still haven’t decided if it’s the actual end of the tunnel appearing or the 2nd train barrelling down on us. The next week should allow that picture to come into better focus.
Last week we talked about how, moving forward, the Guelph real estate market is not going to be business as usual. The market is going to be doing a reset once we have the opportunity to move around more freely, and in our opinion, how business is conducted will be remarkably different.
This week is an example of what we can expect for the coming weeks and possibly months. Twenty-three homes were reported sold in Guelph this past week. Down six sales from last week but thankfully nowhere near the numbers from the previous week. Usually we would be well above 60 sales per week in April. 70 was the count for this same week in 2019, so clearly we have a lot of ground to recover.
In my opinion, I believe the pandemic has prevented the Guelph real estate market from falling off an even higher cliff. Let me expand on this theory.
Early March sales were running significantly higher than 2019, and closing in on the levels in 2017. Prices and competitive offers were jumping at a higher and faster rate that they were in 2017. We had reported numerous times in the previous months that the market was becoming too frothy and approaching unsustainable levels again, especially with inventory levels failing to keep up with demand.
COVID-19 hits, and the real estate market essentially freezes. The transactions being completed over the past 30-45 days are mostly those buyers and sellers caught in mid-transaction. Sales and the supply of homes has dropped by as much as 70% this April over the previous April. While sales prices over the past few weeks have dropped from where they were earlier this year, we are still running above last year's prices. Waterloo is still up 2.4%, Kitchener 4.5%, Guelph 6.9%, and Cambridge is up a stunning 11.7% over 2019.
New listings and the number of homes for sale throughout the region have dropped by double digits, which isn’t surprising — it was expected once the government declared the pandemic emergency. Even with real estate being deemed essential, most consumers and Realtors took the warnings to socially isolate serious and followed directions.
When supply or demand change significantly in a market, price is the main variable to reflect those changes. Since the beginning of COVID-19, both supply and demand have dropped dramatically in the Guelph real estate market. The already low supply of homes on the market has been suppressed because of the pandemic, while demand has been curtailed because of the emergency measures. Nobody wants to take on the enormous health risks associated with buying or selling real estate during a pandemic unless they absolutely have too.
In a “normal” market, when either supply or demand become overweight, we expect to see prices rise with increased demand, as buyers fight for a smaller pool of homes — or, prices drop dramatically because too many people are putting their homes on the market, usually as a result of an economic crisis. Economics 101. In our current market, the result of dropping demand and supply at the same time is that the real estate market has basically frozen, and prices have remained stable.
Here’s what we’ll be watching for over the coming weeks:
How quickly new listing inventory starts to build and the number of homes available to buyers starts to regenerate
How quickly buyers that were previously looking start to return to the marketplace
The sales to list price ratio — this will be a closely watched metric, one that will give us some insight into how competitive buyers are in the marketplace
February and March sellers were obtaining sales prices well over list prices, as multiple offers once again became the norm in our market. April’s performance, on the other hand, was just slightly off from the same level in 2019. In other words, a lot of steam came out of the Guelph real estate market in the past 30 days.
We’ll also be watching what happens in the other provinces that have been less severely impacted by the pandemic and are able to open up earlier than Ontario. We’re also watching the US housing market to see how it rebounds, but also to see what the impact is for some of those states and communities that perhaps are a little too quick to re-open for business.
This freeze, I believe, will prevent the market from hitting the highs we saw back in 2017 and will make it easier for people to re-engage with the local real estate market.
The potential curve ball for our projections will be how quickly people re-engage economically once social distancing starts to relax. If the recovery is long and drawn out and financial confidence doesn’t return, I would then expect inventory levels to build and prices to continue to drop off. If however, most people are able to regain their jobs and they quickly become confident in their economic future, I would expect the real estate market to quickly resume at a more sustainable rate similar to 2019 and 2018. Time will tell as we watch this unfold in real time.
Part of the discussion will centre around how we get back to work without inviting a severe second wave of COVID-19 that puts our economy and health care system back into the ICU.
We have put together protocols and systems to allow our team to work with our sellers and buyers, utilizing technology and strict safety protocols. You can see our latest protocols for buyers and sellers below:
There are a lot of moving parts to get thawed out over the coming weeks, and it will take months to have the economy firing on all cylinders again. However, we strongly feel that our real estate market will recover and play a large role in helping the rest of our economy recover.
We’ll be publishing a special edition of the April market stats early next week, where we’ll take a deep dive into which neighbourhoods and price points have been most affected by the pandemic disruption.
Stay tuned and thank you for being a weekly subscriber.
For non-subscribers, if you want to know what’s selling in your neighbourhood, subscribe below for access to the weekly sales information, broken down by neighbourhood.
As always, we welcome your questions and feedback.
Have a safe weekend.
Paul
Curious what homes sales look like in today's market?
Our blog subscribers receive a free report every Friday with the weekly sales in each Guelph neighbourhood, plus the list price and the sold price of each property. If you are not a subscriber but would like access to these exclusive reports, click the link below to receive this week's sales reports instantly.
GET ACCESS TO NEIGHBOURHOOD SALES REPORTS
SPOTLIGHT: LOCAL BUSINESS WE LOVE
The Seed is a not-for-profit food project at the Guelph CHC, whose aim to to make Guelph-Wellington the first community in Canada to eradicate food insecurity. You may be familiar with their Souper Heroes fundraiser, a staple at local markets and community events. This past month, they started an Emergency Food Home Delivery program that provides vulnerable populations with access to healthy food during a time of social isolation.
The program is to serve 10,000 community members, in particular seniors, low-income families, and people with health conditions — and it relies heavily on the generosity of our community. Currently, The Seed is accepting financial and food surplus donations, volunteer packers and drivers, and volunteer cooks. If you would like to learn more about how you can support this cause, follow the link below:
Featured Property
49 Rhonda Road | Unit 85 | Guelph, ON
3 BED | 1.5 BATH | 1,293 SQ FT
This home checks all the boxes for a hassle-free downsizer or first-time purchase! With a carpet-free main floor, contemporary finishes, plenty of storage and incredible natural light, 85-49 Rhonda Road will feel like home from the day you move in! And with great outdoor spaces, a convenient West end location, and low condo fees, this home is certainly not one to miss!
View this home virtually & contact listing agent for more information.
Listed by: Emma Kuizenga, Sales Representative
VIEW LISTING & PHOTOS TAKE A VIRTUAL TOUR
STAY CONNECTED
Sign up for our weekly real estate blog and receive up-to-date information on local market conditions, plus exclusive home sales reports for the previous week for all of Guelph’s neighbourhoods and nearby cities
