Those who are actively deciding whether to buy and sell Guelph real estate should pay attention. Those who casually (or obsessively!) browse MLS listings have likely noticed one thing: volatility. It hasn’t been a buyers market for any long period of time for over a decade. Guelph, like many other Southern Ontario cities just went through an extreme sellers market.
What does a buyer and seller market really mean in Guelph real estate?
There’s also a balanced market where, well, everything is balanced between buyers and sellers. How do you know which one you’re in? It’s tough to say where we’ll be 3 weeks from today on Guelph housing prices, let alone 3 months.
The simplest definition is supply and demand. Since housing is an open market and not regulated, prices to buy and sell will fluctuate based on market desire. Therefore, in the simplest terms:
Buyers market: There are more houses available than people to buy them. Prices go down because buyers have choice.
Sellers market: There are more people wanting to buy than available housing options. Prices go up because buyers are fighting for the few options they have.
Balanced market: enough supply to satisfy buyers and sellers. Negotiation is able to happen on both ends and everyone is happy. Conditional offers in real estate return.
How do you determine the difference between buyers market, sellers market and balanced market?
The type of market we’re in is typically measured in “months of inventory”. Although there is no very specific definition of a type of market, it’s generally accepted that:
- A sellers market is less than 3 months inventory
- A balanced market is 3-5 months inventory
- A buyers market has 5 months or more of inventory
To calculate this, you simply need to know two things:
- How many homes sell on average in your market per month over the past 6 months
- How many homes are currently for sale
In the Guelph real estate market, we average about 200 single family residential buy and sell sales per month. There are currently about 300 homes for sale in Guelph. Therefore, this would mean that we have 1.5 months inventory and are still in a sellers market. Although not a “hot” sellers market, it’s still a sellers market.
For the Guelph real estate market to move into balanced territory, we’d need 600 or more houses for sale at any given time. For context, there hasn’t been more than 300 houses for sale in Guelph for years, yet alone 600.
Buy and sell in Guelph: A Buyer’s Market
A buyer’s market exists when people who want to buy and sell homes have more negotiating power than people selling homes. Buyers have the upper hand and like the fact that they have lots of choices to shop around. They’re able to browse Guelph real estate listings of a single house for a month. They can negotiate prices and terms that are suitable to them. If they can’t negotiate a suitable offer on their favourite house, they can just go to the next one!
Since buyers are in control, they can also add conditions to their offer. These conditions could be a financing condition, a home inspection (read: should I get a home inspection) condition, or even a sale of property condition. Buyers have the opportunity to take their time and make sure the property is the best option for them.
Sellers don’t really like a buyers market.
Especially if they really NEED to sell their house. This is because during a more balanced buy and sell market, houses tend to sit on the market longer. Buyers have the luxury of time to perform their due diligence via conditions.
And, the longer a house sits when a seller needs to sell, the more desperate they become! More desperation equates to lower prices as one seller tries to undercut another.
In a buyers market, a seller really needs their Realtor to work for them. From staging to photos and marketing, you need to differentiate yourself. This will sell your home quickly and for the most money. In todays market, they also need to understand where the buyers are coming from and find them. This is why Beth and Ryan are members of the Toronto Real Estate Board (TREB).
It’s also the reason you may see multiple MLS listings for a single home- because they’ve listed it in two real estate boards to double the exposure to real estate agents.
Characteristics of a Buyer’s Market
- Homes sell slowly (in some cases the average days on market could be 30-60)
- Homes sell at or below list price (could be as low as 85-90%)
- Home prices are falling and perhaps have reduced prices 1-2 times already if comparable properties are listed
- Plenty of homes are on the market giving buyers many choices
Strategies for Buyers
Here are a few things that buyers may be considering in a buyers market:
Offer Less Than Asking Price- Why would you pay more than you have to?
Ask the Seller to Make Repairs– You don’t always need a home inspection to know that a home needs a new roof. Sellers are more likely to make needed repairs in a buyer’s market. This is unless they’re willing to sell the property as a fixer-upper. This is knowing that this will limit their pool of potential buyers and probably depress the price.
Take Your Time– what’s the rush? Unless a buyer finds out that they may be competing for a house, sometimes time is the best way to negotiate a better price!
Buy and sell in Guelph: A Seller’s market
In a seller’s market (like Guelph real estate), sellers have more negotiating power than prospective buyers. MLS listings come and go in 7 days. In a seller’s market, there are fewer homes for sale than buyers.
Much of Ontario is experiencing a seller’s market today because there’s a province wide housing shortage. As a result, the median price for a pre-owned home recently hit an all-time high.
Since sellers are in control, they often get multiple offers on their listings. The more competitive it gets, the more buyers attempt to improve their offer. Of course, offering more money is the main tactic. However, not having ANY conditions is required in order to be competitive.
Unlike a buyers market, a sellers market moves very quickly. Buyers have little time to get their finances in order and often forego a home inspection.
Buyers really hate a sellers market
Especially if they really NEED to buy a house. During a sellers market, houses go to the highest bidder. You have no idea what any details of the other offers are.
It becomes a very emotional roller coaster that could go on for a long time. In an extreme sellers market it’s not uncommon for buyers to lose out a dozen times.
In a sellers market, a buyer really needs their Realtor to keep them focused, organized and aggressive. Buyers need their real estate agent to have a pulse on what things have been selling for. This is harder for a less active Realtor to do.
Your Guelph real estate agent needs to know all the details of MLS listings that buyers don’t see. This includes comparables, offer dates, closing dates, ability to do a pre-offer home inspection. It also allows for the ability to check on outstanding permits and more.
A good Realtor will bulldoze the way for you to make a competitive, clean offer to the seller.
Characteristics of a Seller’s Market
- Buy and sell is firmly tilted in the sellers favour- a seller will be holding offers. Read: what is holding offers?
- Homes sell at or above list price- Guelph saw a peak of 11% over asking on average in 2021. Its now about 5%
- Home prices are rising- GTA buyers willing to pay more, because Guelph is now the cheapest city in the GTA
- Few homes are on the market- anything under 125 in Guelph real estate is dire
Strategies for Sellers
List Your Home at, or slightly below Market Value
Even though houses for sale in Guelph tend to sell for more money in a seller’s market, it still helps to price your home fairly. If you set your asking price at or slightly below fair market value, you’re likely to attract more interested buyers.
Some sellers choose to list their homes for slightly less than the assessed value in order to encourage a bidding war. If you price your home too high, buyers will simply walk away or wait.
Know How to Choose the Best Offer
Sellers are often so focused on choosing the highest dollar offer. However, they fail to examine the financial strength of each buyer.
Just because a buyer agrees to pay a certain amount for your home isn’t a slam dunk. They still need to qualify at closing with that lender.
Lenders will not allow buyers to borrow more than the assessed value of your home. Read: what is a home appraisal
The last thing you want is to accept an unrealistic offer. It’s the old “this is too good to be true”. This may force you to put your home back on the market when the deal falls through.
The longer your home is on the market, the more questionable it will seem to buyers. This gives more power they will have when negotiating.
Be Aware of conditions
There is more to consider about an offer than just the offer price. Sellers must look out for conditions the buyers have put into the offer. These could be inspection, mortgage, sale of their home, etc. All these conditions enable the buyer to back out of the sale if any of the conditions are not met.
Bonus: Clear the way for clean offers
The best Guelph real estate agents know how to set up a strategy. This enables their seller clients to get the best offers on offer day. It’s part communication and part negotiation. The idea is that much of the pre-negotiation is done before the offers even come in. It saves wasting time later by asking for a copy of a real estate deposit with the buyers offer. Or, asking about the buyer and their finances in advance and so much more.
Most of this can be accomplished with your Realtor, as long as the client has the information available.
A balanced Guelph real estate Market
In a balanced market, the buy and sell process is a traditional way of looking at Guelph housing. The supply of homes is equal to demand from buyers.
This type of market is optimal for both parties. Buyers, especially if they already own a home can get through the buy and sell process with much less stress.
They are able to purchase houses at market value while seller’s receive market value their homes. Both parties are happy as no party is getting the short end of the deal!
The buy and sell process for a house can be a daunting task and you need the guidance of a professional Guelph realtor to guide you. Even if you just want advice, don’t be afraid to ask us! As Guelph realtors with Home Group Realty, know the market!