It’s that time of year again, where we review our current year predictions (2022) while providing our Guelph real estate predictions for 2023!
2022 was a wild year for a variety of reasons. It started out as a record breaking, extremely aggressive and lucrative time for sellers. It was an extremely frustrating market for buyers.
But by mid year, the market quickly turned to buyers favour and prices began to decline. Suddenly the tables turned and buyers got their revenge. Now, as we head into the final weeks of 2022, we’re somewhere in the middle in what could be classified as a balanced market.
2023 Guelph real estate predictions
Of course, making predictions on a full year worth of real estate is a big task. In fact, if we knew for certain we’d probably be retired already!
Our team watches data on a weekly basis, so we start to see trends in real time. It was what allowed us to predict the rise in bungalows for sale in Guelph in the older neighbourhoods as downsizers and investors moved into Guelph.
Our data also allowed us to see that market share of Greater Toronto area realtors moving into Guelph were increasing in 2019/2020. This was before the big booms actually happened in 2021.
So, based on what see today, here’s three areas that we will look at to provide insight into 2023:
2023 Guelph real estate predictions: Market performance
2022 was a surprising year, as the first half and second half were polar opposites of each other. When we outlined our 2022 Guelph real estate predictions, we called a rise in Q1 and a fall in Q3- which both happened. However, they were more dramatic than we predicted.
For 2023, we anticipate that these large swings will smooth out a little more evenly over the full year.
For context, March 2022 had sales volume of $287 million in Guelph (this is the total price of all home sales in the month added together). But August, this number had fallen to just $87 million- a $200M decline in a month! This wild swing was not sustainable and as inventory rose.
We anticipate 2023 to behave more of like 2019, where sales volume was much more levelled and predictable. Overall, we anticipate a 3-5% decrease in average price as interest rate increases slow down and consumers accept the state of the market.
At the same time, we anticipate a 1-3% increase in number of houses sold on the conservative side- perhaps even greater. 2022 underperformed the market sales vs the previous 3 years due to low inventory in Q1 and a very quiet Q3. For 2023 we anticipate this will pick up to annual levels again.
Guelph condos will gain share
First time buyers who were trying to get into the market earlier this year are now doing so. This, along with new condo developments in Guelph will raise the share of condos in Guelph. In fact, condos are already bouncing back and are now at prices that are higher than a year ago:
Condos have been averaging around 1/3 of total sales in Guelph over the past number of years. However, with more developments in Guelph than ever before we expect this number to hit a record and then push closer to 40% in 2023 for a few reasons:
More first time buyers enter the market
For the past year, many first time buyers feel like the market was against them. And, in a way it was. Those who bought since COVID may have been in a situation where a conditional offer was not an option.
But our 2023 Guelph real estate predictions are more favourable for buyers.
Now, with a more levelled off market, these first time buyers are feeling empowered. And although interest rates have increased, homes for sale in Guelph have declined at a faster rate. Therefore, in some cases it’s actually cheaper to own a house now than during the big run up on prices.
More condo developments in Guelph
Over the past 10 years in Guelph, we’ve had the Metalworks, River Mill and 5 Gordon St as the main developments. There’s also Solstice 1 and 2, but these are mainly geared to the student rentals in Guelph.
Now, there are more. The Tri-Car developments at Gordon and Clair, as an example. Another phase of the Metalworks is underway, as well as other initiatives around the City.
These intensification projects mean more units available which results in greater share of overall sales.
Less “non condos” selling
We’re already starting to see it- non condo (everything but condos) inventory is stagnating. In fact, we’re on a 12 week decline in inventory.
With rising interest rates, people who once thought $1.4M for a house was reasonable at 0.25% interest rates are now re-evaluating (and now not qualifying) for these larger mortgages.
The monthly payments have increased This means that these home values are coming down as there is less demand for them.
Many people are sitting on their hands waiting to determine what will happen with the headlines of a global recession. Those who may have been considering a move may put it on hold.
And, considering “non condos” represent 2/3 of the sales in the market, this will temper any major rise in inventory.
As a result, this will mean the condo share of sales will rise.
Student housing is very tight
Anyone who had a student going to the University of Guelph this year noticed one thing: it’s a mad scramble to find housing. Our 2023 Guelph real estate predictions include an impact from students.
The University of Guelph openly over admitted students in 2022-23 and for the first time didn’t have enough residence space for it’s students. This caused students to flood into the residential rentals in Guelph, driving up prices. Students had to settle for less than ideal prices in less than ideal proximity to the University, just to get a home.
As a result of this, many parents decided to purchase a home/ condo for their students. Taking extra care to ensure they still had a university experience, many of these purchases have been condos or townhouses in student areas (Gordon St, around the University, parts of the Ward).
Now, parents of students are competing with first time buyers, investors and downsizers to find condo spaces.
Our team has helped a number of parents find homes for their children. If you’re looking to purchase a student rental in Guelph, give us a call. We can help you!
Very competitive in the $600- $900K price bracket; $1 mill+ plus houses are suffering
The average price of any house in Guelph in October 2022 is just over $740,000, compared to over $1 million in April. That’s a 25% drop. Declines in prices usually mean that there is a lot of supply, right? Not in this case.
The number of houses for sale in Guelph has declined to 212 as of Nov 3rd, down from over 320 in July. In fact, in some unique downtown properties, we’ve even started to see the return of the dreaded “holding offers”. This reviewing any and all offers on a certain day. Related: holding offers vs irrevocable
These unique type of properties are typically found downtown as the areas are older. Downtown area properties also offer walkability/ access to amenities, which for many is a motivating factor.
Price bracket trends in Guelph: what we’re seeing
Our team analyzes price trends weekly, so if you need to know something about a specific price there is no one better to ask! Here’s what we’re seeing:
We saw a massive spike in inventory in the $400- $600K price bracket in July, but didn’t see corresponding sales. This means that these houses are still on the market, now making up 20% of overall inventory as of Nov 3, 2022.
Almost all of these are condos or townhomes in all areas of the City. We anticipate this grouping will increase into 2023 as there is too much supply and not enough demand.
This market will attract many first time buyers, as there are many types of homes available here. From condos, to townhouses and even some detached options, buyers have choice.
Many of the detached homes in this price bracket should require a home inspection. They’ll likely be older homes in older areas.
$1 mill plus market
2023 Guelph real estate predictions wouldn’t be complete without the $1M plus market. Incredibly, this segment has become completely saturated. If you’re selling a house in this bracket, (particularly south of Kortright Rd) be prepared to negotiate. If you’re buying, you have many options so you can negotiate better.
As the chart shows, in early 2022 almost every $1M listing was sold. Then, a major gap between listings and sales appeared and it has not corrected since. We anticipate this bracket is going to continue to be under pressure into 2023, especially in South Guelph where there are many similar options.
Get in touch for more 2023 Guelph real estate predictions
If you find this type of information interesting or useful, get in touch! We’re Guelph Realtors and would be happy to add you to our mailing list or chat further. Our team can help you buy or sell a home in Guelph.