Beth and Ryan Waller are Guelph Realtors who have been writing for Guelph Today since 2018. This post is our best guess on how the Guelph Real Estate market will perform in 2022.
- Market performance of +13% in dollar increase vs 2021
- Condos will continue to gain share in 2022
- East Guelph will lead city growth
- Creative housing solutions continue to evolve
- Buyers are searching for homes differently, sellers need to adapt
The pandemic has changed the local real estate market in many ways. These trends include out of town buyers moving to Guelph, Guelphites moving to other parts of Ontario, Canada and the world.
Prices have skyrocketed locally, resulting in a changing buyer dynamic and needs for different types of housing. Different locations have increased in popularity due to proximity to amenities and highways.
So it’s that time of the year where Beth and Ryan look into the crystal ball with their best guess of where the Guelph real estate market will go in 2022. They see three key areas to focus:
1. Market performance
A few things happened in 2021 that were anyone’s guess. Mainly, the incredible number of homes that sold over $1 million dollars, from 3% in 2020 to 12% in 2021. Three neighbourhoods now have a median sales price above $1 million (Exhibition Park, Kortright Hills and Village by the Arboretum, respectively).
The averages in these neighbourhoods were key contributors to the average price increase citywide. As a result, at the end of November the median price sales were up an incredible 30% higher than last year in Guelph real estate.
For 2022, Beth and Ryan predict that the market will increase another 13% in 2022. This is mainly due to one issue: supply. Until Guelph gets enough homes on the market to meet the demands of buyers, prices will rise.
As of December 15, there were only 49 single family residential homes (all home types combined) on the market in Guelph. 49! Based on November sales trends, that means all of Guelph housing could be wiped out in a week!
Seasonally, Beth and Ryan predict a similar year to 2021. Their prediction is:
- January to March will still see a very aggressive market (+25%)
- April- August will have modest gains with a slower July and August (+10%)
- September to December will see slight declines vs 2021 (-1%)
This weighted average should put Guelph in the +13% range for full year 2022.
2. Condos will gain more market share
When prices get higher and supply is low, buyers begin to review their wants and needs. They try to guess what other options may be available to them. This could include location, price and style of home.
One of the trends Beth and Ryan have been noticing is that condos are increasing in market share versus other types of homes. Specifically, low rise and high rise condo buildings.
From September through December specifically, in some weeks condos made up over 40% of sales despite only making up 25-30% of listings. This calculation means that condos are growing in market share. These Guelph REALTORS® anticipate that this trend will continue through 2022, with condos making up between 35- 40% of sales.
It’s estimated that the cost per square foot of a condo in Guelph will move into the $650-$700/sf in 2022 from a $525/sf in 2021.
Beth and Ryan continue to see many first time buyers from the GTA moving into Guelph, particularly from Brampton, Mississauga and Milton. Millennials, as well as buyers that feel they have been priced out of detached and semi detached homes, have been significant buyers of condo developments.
Their guess is that because of the wide range of condo prices (from $400,000 in west Guelph to over $1 million in downtown Guelph), they’re also noticing many downsizers move to a condo. In many cases, these are lifestyle changes: from larger family homes to smaller condos. This means less time spent on home maintenance and more time for things like travel and leisure.
3. East end leads growth
Last year, Beth and Ryan predicted that east and south Guelph semis and townhomes would be hot properties in 2021- and they were right.
For 2022, their guess is that the area known as Grange Road is poised to outpace city growth due to a wide variety of housing styles and proximity to area code 437, 416 and 905. This area is already a high turn over area, as it’s dense and has many starter homes. Once families start to get larger, these buyers move to larger homes within the same area.
In particular, Beth and Ryan note that semis and towns east of Gordon St will remain very hot. Looking forward into the next 3 weeks from today (spring 2022) we see some levelling off. The team also sees detached homes in the Grange Rd area outpacing the rest of the city due to increased commercial development. This area was already popular before this, so it’s going to be even more attractive afterwards.
4. Creative housing solutions continue to evolve
One of the largest emerging trends that Beth and Ryan are seeing as Guelph real estate agents is the creativity of buyers in 2022. Buyers are beginning to guess what they can expect to happen in the market and we’re starting to see:
Buyers, in particular first time buyers are pooling their funds together. Since $450,000 won’t buy them a detached home on their own, they’re decided to pool together with others and purchase a $900,000 bungalow. This way, they can do something like a house hack, creating a legal secondary unit.
In a traditional situation, a family member who passes away leaves an inheritance to their children or grandchildren. With family members living longer and staying in their homes longer, they’re changing their position. Their guess is that real estate prices will continue to rise and so they are literally giving an early inheritance to their family members. This allows them to have enough of a downpayment to fund a home purchase. Downpayments are the biggest hurdle for many first time buyers and an early inheritance is extremely helpful. (read: downpayment vs deposit)
Co-signer on title
The final trend we’re seeing is a parent or family member helping out by putting themselves on title to help first time buyers. Our guess is that this is solely for the buyers to strengthen their financial position with the bank. By having parents or family members on title that already likely has significant equity in their home, buyers can qualify easier and for greater funds.
A word of caution if you are going this route for the co-signer. Despite the fact that you have no intention of living in the property, in the banks eyes you are an owner. Being a co-signer will impact your ability to qualify for loans as long as you are on title. The key here may be to have a co-signer for the first year and then attempt to remove them afterwards, once the owner can qualify on their own.
5. Buyers are searching for homes differently, sellers need to adapt
COVID has changed the way people do many things, including purchasing homes. Pre-covid, buyers searched for homes in different ways than they do two years later. As an example, first time buyers who often relied on open houses in Guelph to get a feel for what their budget got them were forced to rely on photos. These same first time buyers used open houses to also covertly interview real estate agents, because they didn’t have one already.
Without open houses and the requirement to make an appointment with a Realtor to view any homes, buyers put far more emphasis on photos, videos and floorplans. Buyers are more savvy than they’ve ever been. Apps like Housesigma have allowed consumers to do a lot of pre-work before they guess whether a home was worth going to see in person with a Realtor.
As sellers, they need to be more savvy. They need to put significantly increased importance on staging, professional photos and video. It can be the difference between coming to see a house or not, as well as whether a buyer puts an emotional attachment on a house. Ironically, not every Realtor believes this is true (which is why we think we beat the competition!)
Beth and Ryan Waller’s Real Estate Team issue a monthly real estate newsletter to clients that contains information on a wide variety of topics, including monthly data reports. We’ve also transitioned our GuelphToday real estate market updates into video. If you wish to receive this email (issued only once monthly), get in touch with us!