November 2018 was the best November on record in the Guelph real estate market, with overall sales increasing over 3% vs 2017 and overall unit sales relatively flat. The average sale price in November 2018 was just over $500,000. That brings the overall year-to-date Guelph home price average to flat vs 2017, +21% vs 2016 and +36% vs 2015.
It would be easy to assume that with the price of homes increasing, more houses (and more expensive houses) are driving up real estate prices in Guelph. But in reality, the number of houses sold in Guelph in 2018 is actually declining versus prior years.
Yes, fewer houses have sold this year.
So, what’s happening? It’s tough to say for sure, but after the wild Guelph real estate ride of 2017, we’ve moved to a more rational and sustainable market, which is healthier for both buyers and sellers. And let’s not forget that The Bank of Canada has also increased interest rates 5 times since the summer of 2017 and tightened up mortgage rules.
But we’ve taken a brief breather: On December 5 th , the Bank of Canada left its interest rate unchanged at 1.75%, indicating the timing and number of future hikes will depend on a variety of factors including the job market, inflation and oil prices.
Although, at this point, you can still expect up to 3 interest rate hikes in 2019.
Competition tightens for homes in the $500,000 range
If you look at the different price brackets within Guelph, you’ll see the homes under $300,000 and homes over $900,000 aren’t changing very much as a percentage of total sales. It’s the numbers in between that are slowly ratcheting upwards and becoming far more competitive.
If you’re considering purchasing a home in the range of $450,000-$500,000 in Guelph, odds are you may be in more competition than you’d like. Over 36% of homes in this bracket have sold at or above the asking price this year and it is now one of the most competitive ranges in Guelph as it increases as a % of total sales.
From a neighbourhood perspective, if you’re considering buying a house in either the Grange Rd area or Pineridge/ Westminster neighbourhoods, you’re in luck: sales in these two areas alone equate to over 30% of sales in Guelph year-to-date. And, like in 2017 if you are searching for a home in the General Hospital area, you’ll need some patience as it is the area with the least sales in 2018.
Investors and the rental market
Residential investors may also be exploring other options when considering purchasing a home in Guelph that maintains positive cash flow (the property shows a profit after all expenses are deducted). The combination of substantial home price increases over the past few years along with Ontario Rent Guidelines that ensure landlords only increase rent at the rate of inflation for existing tenants (1.8% increase) creates a widening gap and cash flow challenges. Landlords are having to pay more for a home but may be challenged to cover all costs with the going rate rent. Landlords need to come up with more creative options for investing, while the City needs to develop more rental options for a growing market.
The rental market in Guelph remains tight, with a vacancy rate in the 1-1.5% range. If you are renting it may currently be difficult to find a suitable home that meets your needs in your desired neighbourhood, as there are few homes available.
Overall, the Guelph market is proving resilient and continues to be a City where people want to live, work and invest.