Within two weeks, the world has changed dramatically due to COVID-19. We’re now in the face of massive closures and shutdowns, cancelled sports seasons, stock market declines and fistfights in the aisles of Costco over toilet paper. COVID-19, or the Coronavirus, has impacted everyone internationally in one way or another. But does the trickle-down of this global virus eventually impact the Guelph housing market?
Yes, it does.
But exactly how, is anyone’s guess.
There are several scenarios that could play out in the Guelph real estate market in the coming weeks and months. With Coronavirus panic and uncertainty in the market, both buyers and sellers need to wade through facts and figures to determine whether now is a good time to buy or sell.
In March alone, the Big Five banks have made a 1 per cent cut in the prime rate, which is the key benchmark that underpins variable-rate mortgages and lines of credit. The Office of the Superintendent of Financial Institutions, the federal banking regulator, also had plans to recalculate and reduce the qualifying rate on mortgages but has now put this plan on hold.
It could get more aggressive in the market due to COVID-19.
There’s no question that the Southern Ontario real estate market is in short supply of homes for sale. The Toronto Real Estate Board (TREB) reports that the average price of a home has increased by almost 17 per cent or $130,000 in February alone.
In January, 60 per cent of homes sold at or above the listing price in Guelph. In February, that number increased to 63 per cent. As of March 13, 68 per cent have sold at or above the list price this month.
It’s equally hot in Guelph.
Sellers are taking the record-high sales prices from the GTA and putting their money to work in Guelph where real estate is relatively cheaper. At the same time, there are fewer sellers putting their homes on the market in Guelph for a variety of reasons.
But what if those sellers decide it’s not urgent to sell and decide to wait until COVID-19 is behind us? Fewer homes on the market with the same number of buyers could cause an even worse housing frenzy.
Local realtors, Beth and Ryan Waller predict that the higher-end home segment in Guelph of $750,000-plus will gain market share. In February alone, this segment represented 17 per cent of home sales versus 11 per cent in February 2019. Homebuyers in this segment that are considering selling this year may want to do so during the spring rush.
Or, the market may be flooded with supply and there are fewer buyers
Maybe sellers believe we are in for a recession, racing to get their houses on the market. After all, the Guelph market has had quite a run and it’s always good to sell at the high.
At the same time, buyers aren’t going out in public for open houses and viewings. Doing so could expose them to COVID-19. Will supply increase and demand decrease.
If so, prices will rapidly decline and the competitiveness of today’s market will take a breather making it easier for buyers to get into their dream home.
Or it may be business as usual
It’s quite likely that we’ll see a combination of both of these scenarios as we move into the spring market – the traditional strong period for buying and selling homes. There will be increased sellers and continued demand from out of town and local buyers. And as a result, the market will probably tread along at a more balanced, more reasonable pace than we’ve seen in the past few months.
One of the most important things to consider is the guidance of a local REALTOR® who follows the market closely. If you’re selling, a marketing plan is necessary to maximize your sale price in today’s market. If you’re buying, you should have insight into neighbourhood trends, potential buying strategies and strong negotiators working for you.