WHERE TO NEXT?

The week that was.

The past week in the Guelph real estate market has been interesting on a number of levels. Number of sales this past week was just 73% of the same week in 2019 and 86% of the sales numbers in 2018.

So what is the story there?

Interesting in that 58% (22/38) of the homes sold last week went at or above list price, with the median sales price being 106.88% of the list price. Compare this with 2019, where the median sales price was 98.63% of the list price. How do you account for such high price points when overall sales are reduced?

It’s all about the inventory levels, or in other words the number of homes available for sale at any given time.

We’ve frequently written about the severe lack of available homes for sale in our market, and this is where compounding has a less than desirable effect on our housing market.

In October 2018, there were 4,180 homes listed in our board, and 2,622 sold that month. However, the report shows only 685 homes available for sale at the end of the month. Common sense says there should be 1,558 homes left in the market for sale. Where did the other 873 homes go? Great question!

A number of those homes were pulled from the market – either the listing expired or was cancelled. What few people will realize is that there is a lot of churn on the listing side, as agents will switch strategies mid-stream: cancelling and relisting the property, often 2 or 3 times. You see this when sellers employ a ‘price low and hold for offers’ strategy, expecting to see multiple offers. When this strategy backfires or offer prices don't meet expectations, the result is often that the listing is cancelled and then re-listed at a different price.

Fast forward to October 2019. Listings are up 4.55% from 2018 to 4,370, and sales are up 7.51% to 2,819. Ending inventory is down 7.59% to 633 homes.

Jump to October 2020. Listings are down 13.43% from 2019 to 3,783, and sales are up 1.99% to 2,875. Ending inventory is down a whopping 42% to 366 homes.

You can clearly see how a declining number of new listings, coupled with increasing sales, means inventory levels will continues to tighten up.

2019 was still a strong seller’s market: 17 days on market and sellers negotiating a median sales price that was 98.63% of their original list price. 2020 has reached the stratosphere, with median days on market down to 12 and, in the past week, a sales price to list price ratio of 106.88%.

From a long term perspective, this trend won’t be sustainable. At some point, more people will be tempted by the possible “profit” that they will be enticed to sell and will try to find a cheaper market to purchase in. We’re already seeing this trend emanating from the GTA. Over 10% of the buyers in this market are from outside the Guelph market, with the bulk of those from the GTA. Unfortunately, I don’t have exact numbers yet, as this is something that hasn’t been fully tracked.

It’s a matter of time before this process gains momentum with Guelph sellers, who will cash out here and either move northwest or southwest to find cheaper homes and still be able to commute or work remotely. The end result should be elevated listing inventory, and together with additional new construction, we should see increased availability – which will soften prices. Notice I said soften. I don’t anticipate huge price decreases. Our region is too popular with GTA buyers, and has sustained such net growth that demand will remain high. Economically, this area remains strong and growing, which in turn adds fuel to demand.

The end result: don’t expect this market to become a bargain any time soon. We might see some fluctuations in pricing short-term, as other factors like a pandemic, politics and even interest rates affect the local market.

Our best advice: don’t bother trying to time market fluctuations, you will miss opportunities, because the “time” is never right. If you are buying, do all the right things by getting pre-approved for your financing, interview and find the right agent for you. That means someone you trust and can communicate effectively with, and someone that will go the distance and beyond for you.

Sellers should be working with an agent and brokerage that understands the market and will help customize a strategy to maximize value from your home. Remember that the market doesn’t treat all homes the exact same way. There are a significant number of listings that still come off the market each month because of the wrong pricing and marketing strategies. While we are experiencing a very hot seller’s market, the market conditions alone will not deliver success for sellers.

To be successful in this market, buying or selling, there is no substitute for being well-educated and prepared.

THE PAST WEEK IN THE GUELPH REAL ESTATE MARKET

Last week, the median home sold in Guelph looked like this: 3 bed, 3 bath, 1,570 sqft. It sold in just 9 days, for $656,750 – that’s $410/sqft. Same week last year, the median home was slightly smaller, at 3 beds, 2 baths and 1,356 sqft. This home sold in 19 days for $520,000, or $366/sqft.

Enjoy the weekend and thank you for being a subscriber.

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Mary McEachern (519) 831-6154

Sheryl Palmer (519) 830-0063

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