IMMIGRATION

Part 3: What’s Really Driving Our Real Estate Market?

In Part 3 of the journey to better understand our local real estate market, we’ll take a dive into the role immigration plays in driving demand for housing. 

To start, we need to dispel a few misconceptions. Around the world, the political focus with a number of countries is to focus on putting up barriers to immigration.  Immigration is often viewed as being driven by refugees and low-skilled people looking for better economic opportunities.  

The reality in Canada is that almost 60% of immigrants being welcomed to our country bring necessary skills that are currently in short supply.  Only 16% of immigrants fall into the Refugee and Humanitarian classes – a necessary role that Canada needs to and can afford to be part of.

The latest Immigration Levels Plan released by the federal government targets 401,000 individuals choosing Canada as their new home in 2021.  That target will rise to 421,000 by 2023. You can read about how Canada selects and screens new immigrants here: Immigration Canada

400,000 newcomers to Canada seems like it would be a tremendous strain on our system, especially around finding jobs for all of them.  However, the demand for skilled workers has been growing and our “homegrown” supply has been falling behind due to Canada having one of the lowest birth rates and oldest populations in the world. 

With over 9 million baby boomers setting up to retire, the pressure to find the necessary workers to fill those roles (and more importantly, to support the pension and healthcare systems) is growing.  As a nation, we have become dependent on new immigrants to help keep Canada’s economy strong and growing. 

Studies have shown that the bulk of new immigrants will end up in the larger urban areas like the GTA, Vancouver and Montreal.  Areas like Waterloo that focus on high tech also attract large numbers of new immigrants.

Given their job skills and ability to get ‘back on their feet’, it doesn’t take long for many newcomers to enter into the real estate market.  We see evidence of this in our region as young high-tech workers, programmers, engineers, etc. migrate to this area due to the proximity of computer industry jobs in Southern Ontario.

The shortsighted downside to immigration is the additional pressure and competition in sectors like real estate.  Shortsighted because in the long run, immigration will allow the Canadian economy to continue to grow and sustain the lifestyle we’ve grown accustomed to. 

Looking back over the past few weeks, we’ve examined the roles that current interest rates, millennials and immigration are combining to fuel and unprecedented demand for real estate.  The challenge is to avoid crushing the real estate market because it becomes too expensive.  The solutions are not as simple as just building more homes.  The challenges to building more are deeper and more complex, and in my opinion are going to take a concerted effort on all levels of government to solve the supply problem.  

Next week, we’ll look at some of the solutions and what other countries have done to solve this problem.  

THE PAST WEEK IN THE GUELPH REAL ESTATE MARKET

Last week in our local market, 38 homes sold – just up from last year’s 35 sales.

The median home last week looked like this: 3 bedrooms, 2 bathrooms, and 1,315 square feet. This home sold in 8 days for $605,500 – that’s $412/sqft and 101.05% of the original list price.

Same week last year, the median home was almost identical, with 3 beds, 2 baths and 1,378 square feet. In contrast, this home sold in 17 days for $492,000 – that’s $357/sqft and 98.03% of the original list price.

29 of the 38 homes sold last week went at or above list price, while just 13 (of 35) did the same week last year. In addition to the 3% increase in sales-price-to-list-price ratio, the median list price itself grew a whopping 25%, from $479,900 to $599,900. Quite a difference a year makes, and well exemplified by this past week’s activity.

Thanks for being part of our community. Join us again next Friday for the final blog in our series, What’s Really Driving Our Real Estate Market?

---

A 30% increase in domestic violence has been reported since the beginning of the COVID-19 pandemic, and Guelph-Wellington Women in Crisis has had a noticeable increase in the need for their services. The events of this year have brought to the forefront the basic purpose of ‘home’: a place of shelter. Home Group Realty believes that every member of our community should have access to shelter, and the She is Your Neighbour Holiday Campaign is an opportunity to empower women in our community to seek shelter for themselves and their loved ones.

This holiday season, HGR has teamed up with Your Neighbourhood Credit Union to run a gift card drive in support of Guelph-Wellington Women in Crisis. This campaign aims to directly support women in our community who are facing food insecurity and struggling to provide basic necessities for themselves and their families.

You can help your neighbour create a new beginning free from violence with the donation of a grocery gift card. Simply drop off a grocery card at Your Neighbourhood Credit Union's Guelph branch (190 Clair Road East) before December 18th and YNCU will match all donations over $25 with a $10 donation.

---

FEATURED PROPERTY:

DRAYTON RIDGE

DRAYTON, ON

DETACHED 2 STOREYS, BUNGALOWS & BUNGALOFTS

50’, 80’ & PIE LOTS AVAILABLE

Beautiful, custom-built detached homes in with March 1st move-in dates available & still time to choose finishes. Plus, no competing offers! Just 40 minutes from Guelph & KW, discover the community of Drayton and live stress-free in your new custom home! Visit our model home this weekend or book a private (or virtual) showing with our sales team.

Matthew Webster (519) 731-6464

John Gaida (647) 680-2145

Learn more about the Home Group Realty Journey

SIGN UP FOR SALES REPORTS

Not a subscriber? Sign up for our weekly blog and receive up-to-date information on local market conditions, plus receive exclusive reports with each week’s homes sales & sales price, for all of Guelph’s neighbourhoods and nearby cities

KEEP READING