It’s that time of year again, where look back on 2024 while providing our 2025 Guelph real estate predictions!
Here is the full video from Youtube on our Guelph real estate predictions:
2024 was a much tamer year than most had predicted. If you remember a year ago, many economists and banks were anticipating that spring 2024 was going to be a launch upwards of real estate prices. In fact, this was likely why Q4 2023 was so slow. All those who were reading about this boom in real estate in Q1 2024 pulled their houses off the market at that time with the intent to relist in spring 2024.
However, it didn’t happen.
What many failed to realize is that all those who took their houses off the market in Fall 2023 were planning to come back- along with everyone else who planned to list in Q1 2024. The result was fairly predictable: a glut of homes on the market in spring 2024 (supply) and subdued demand. Overall, a lacklustre spring.
Here’s a video from Global News that was produced in early 2024 talking about the Spring 2024 market. We weren’t nearly as bullish as others.
Spring 2024 Guelph real estate market
By May (statistically the peak of Guelph real estate prices annually), Guelph had been performing, well, “OK”. However inventory of residential resale homes kept rising from 250 houses, to 300 houses. (by August, this was up to 350 and by September, we hit 400 houses).
In the meantime, the Government did cut interest rates 3 times (0.25% x 3) for a total rate reduction of .75%. Although this was helpful for those with variable rate mortgages, lines of credit and even car loans, damage had been done. Inflation was starting to ease. However, you didn’t have to look far for increased prices on everyday goods and services that impacted consumers day to day lives.
This lagging inflation wasn’t something that many had taken into account. People were (and are still) stretched as their day to day lives became more expensive. They weren’t qualifying for mortgages because rates were still too high. Those who had a mortgage didn’t want to break an already low rate that they had from 2020 or 2021. In some cases, these rates were below 2%.
By the end of June, the number of homes sold in Guelph was almost identical to the first half of 2023. However, it was a significant decline vs 2020, 2021 and 2022. In terms of average price, it had declined by 2% from 2023.
Into fall 2024
Now, at the mid October mark, we anticipate the market to fall into a typical seasonal pattern of lower than average sales. This will likely bring a lower average price as well. We monitor sales per day and as you’ll see on the below chart, it’s quite predictable.
The overall average houses sold in Guelph per day is at the top, followed by the average sales per day by month. Months that exceed the average are in green, while months below the average are in red. In most cases, from July onwards the market begins to slow.
2025 Guelph real estate predictions
Of course, making our 2025 Guelph real estate predictions on a full year worth of real estate is a big task. A year is a long time!
Our team watches data on a weekly basis, so we start to see trends in real time. It was what allowed us to predict the rise in bungalows for sale in Guelph in the older neighbourhoods as downsizers and investors moved into Guelph.
So, based on what see today, here’s three areas that we will look at to provide insight into 2025:
1. Market performance -2 to +2% on average price
Basically, we’re calling a flat year in Guelph real estate. Nothing overly eventful should happen in totality, although we’ll likely see a spring rush (more houses selling, but not necessarily rising prices).
It’s worth noting in our prediction that “average price” is simply that- the average. So, if there were a glut of lower priced homes to sell, it could bring the average price down 20%. This doesn’t mean every house in Guelph has declined 20%, it could mean the mix of sold houses has changed. Going the other way, if we do sell more higher priced homes selling (see below), it could appear that the average is rising.
We do anticipate the number of houses sold to increase 3-5% vs 2024. This is due to a few reasons, mainly further declining interest rates and some renewed interest in the $750K and below segments.
In 2024, as the $1M+ segment in Guelph has struggled. Throughout the spring, the number of houses in this segment has risen (greater supply), while the number of sales didn’t move (weaker demand). At one point we had over 140 houses in this segment with an average of 4 sales per week. When buyers have choice, prices inevitably decline. And if less of these houses sell vs 2023, the average price declines.
2. $1M+ segment sees strength
One of the toughest price brackets in Guelph real estate in 2023 were houses priced at $1M or above. We thought this was going to improve in 2024, but we were wrong. Interest rates didn’t come down as fast as predicted and affordabilty didn’t improve.
To complicate this further, 26% of houses sold in 2022 (the peak of the Guelph market) sold at $1M or more. In many cases, in todays market these homes would have sold under $1M. Now, some owners are selling these homes and don’t want to take a loss, causing the inventory to pile up. So far in 2024, the percentage of homes selling at $1M or more is just 16% of total sales- a massive decline vs just 2 years ago.
Affordability remains a challenge
Those who would likely be purchasing a house in this price range have an existing house and are “trading up”. They’re not likely first time buyers. In many cases, they have a lower mortgage rate and don’t want to risk losing it. Additionally, they don’t want to take on increased mortgage payments and expenses in an uncertain economy.
To combat this however, in Sept 2024 the Government announced new rules that try to ease this burden. Traditionally you needed to have 20% downpayment on any house over $1M. Depending on your financial situation, you may not have this much equity or liquid funds for a minimum $200,000 downpayment. Naturally, this caused $1M to be a threshold for many for affordability. As of December 15th, 2024 this 20% minimum bar is now raised to purchases of $1.5M. So, it may open opportunity for those selling between $1M- $1.5M to have a wider buyer pool.
Although the Government touts this change as making homes “more affordable”, it’s just smoke and mirrors. In the end, consumers (buyers) can get into a house with less money down- meaning greater sized mortgages and more interest over the long term.
3. Strength south of Stone Road
An earlier video we made this year talked about the performance by neighbourhood. Here’s the year to date sales volume (if you added the sale prices of all homes) by neighbourhood in Guelph this year.
In this chart, we show all the dollar sales of neighbourhoods. This is simply all the sales added together for that neighbourhood from January- September 2024 and the change vs 2023. Although not completely scientific as it’s just a snapshot, it gives an idea of what areas are realizing demand.
The Village by the Arboretum, Kortright East, Clairfields, Pineridge are all rising, while it appears West Guelph is lagging.
This data would imply that buyers are going further out of the GTA to get a home that fits within their budget and mortgage approval. In particular, we’re noticing a larger number of Brampton, Mississauga and City of Toronto agents coming into Guelph to help buyers- and noticeably, first time buyers.
If buyers are “driving till they qualify”, we see South Guelph as an attractive option for these buyers. With interest rates declining and rules for first time buyers changing, we anticipate this area outpacing the rest of Guelph. Additionally, south Guelph has options in almost every available housing format: detached, semi-detached, townhouse condos and apartment condos, broadening its appeal.
Greatest value areas of Guelph- West and East Guelph
There is still great value in some areas of Guelph for those who are looking for housing under $500/sf. Both West Guelph and East Guelph have had tough years (-9% and -6% in sales volumes respectively), but at some point buyers will realize that this means a deal is to be had relative to South Guelph.
West Guelph offers something for every buyer: mature 70’s and 80’s homes. Additionally you’ll find new homes, detached, semi and condo options ranging from $350K- $2M. Additionally, infrastructure upgrades west of Guelph to KW are happening. If you’re considering getting into the market and trading up, give us a call to discuss options for West Guelph as we do significant business here.
East Guelph mostly offers homes from the 90’s to new construction. This area is popular for GTA buyers, in particular Brampton who want to commute to the GTA at a lower price. Like West Guelph, many options here from condos to townhouses/ stacked towns and semi and detached homes.
4. Extra: Demand for student rental properties will rise
Additionally, student housing continues to be a problem in Guelph. Anyone who had a student going to the University of Guelph this year noticed one thing: it’s a mad scramble to find housing. In fact, many would say it’s worse than it’s ever been.
As a result of this, parents continue to call us to purchase a home/ condo for their students. Taking extra care to ensure they still had a university experience, many of these purchases have been condos or townhouses in student areas (Gordon St, around the University, parts of the Ward). This further props up the sales of the south Guelph areas.
We have written a blog that outlines all the considerations for those parents wanting to purchase student housing in Guelph.
Get in touch for more 2025 Guelph real estate predictions
If you find our 2025 Guelph real estate predictions useful, get in touch! We’re Guelph Realtors and would be happy to add you to our mailing list or chat further!
