It’s almost seems like Groundhog Day, writing the same thing over and over again. Guelph real estate, like much of Southern Ontario is a very hot real estate market.
But a few things are starting to emerge were predictable earlier this year. In a video we posted as part of our weekly updates two weeks ago, we called out 3 factors to influence prices. (yes, we know the videos aren’t fancy, but you’re just there for the info, right?)
These factors are coming together and resulting in increased inventory in Guelph as predicted- as of this morning (Feb 25/21) there are 113 active homes in Guelph- the highest number for 2021 so far. And we predict it’s going to keep increasing.
There’s no magic to prices: it’s simply a basic economic function of supply and demand. This is what we experienced at the New Year where there were less than 30 homes available. People were paying whatever it takes because there was nothing available.
As inventory increases and buyers have more choice, prices should start to calm down from the record highs we’re seeing. In some cases these days, the sale prices don’t even make sense.
Is the Guelph real estate market going to crash?
We anticipate a constant flow of buyers from the GTA all year long. This alone is going to be enough to maintain an average price increase over 2020. But with mortgage rates not anticipated to increase until 2023, it will also fuel growth.
However, we do believe that some segments of the Guelph real estate market are going to slowly fall, or lag the market in the coming months.
The $1 million plus segment is going to gain share over the full year, but it’s getting to the point of saturation. In recent weeks, we’ve seen higher and higher highs set here. Some of them have been expected, but others are complete head scratchers.
Timing is everything in real estate and there are early signs that we’re reaching a tipping point of the “how high is high?” mentality on some homes, particularly the $1.4+ million + segment. A few years ago we didn’t even have a house sold in Guelph above that mark. Over the past 10 days, we’re at 3.
Are we pessimists? No.
We are very protective of our clients and strive to ensure that there is value, or long term potential value in what they’re buying. If they’re selling, there is no better time to push the envelope than a hot real estate market and we’ll negotiate and market the home aggressively.
However, in the stock market there is the saying that you should always “sell the news”. As in, be leary of an overly frothy market. But there are some areas and types of Guelph homes that should continue to perform well:
Bungalows. In late 2019, Beth and Ryan called 2020 “the year of the bungalow” and it keeps on going into 2021. The versatility of a bungalow, from investment to downsize to first time buyers make this style of home very popular.
We’ll also continue to see a rise in entry level condos and townhomes, particularly those under $600K. This is likely due to buyers in this range being pushed out of detached homes in Guelph. As we mentioned a few months ago, this is likely going to be east and South Guelph.
As always, if you have any questions please feel free to contact us.