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  • Natasha Pedersen

Real Estate In Guelph, Here's How We Did In 2018

Sales Data Trend Analysis and Interpretation

For the first time in several years, Guelph experienced a rather flat year for real estate prices ... but one still in positive territory. Compared to larger double-digit percentage pricing increases over the past two years, 2018 was quite moderate. Still, over 41% of homes sold in Guelph moved at or above their asking prices, indicating that buyers and sellers are being realistic and competitive concerning housing costs.

Below are some takeaways from the Guelph Housing Market Report data. Market statistics and analysis are compiled for you by Home Group Realty Based on sales data from Ontario Regional Technology and Information Services MLS® for detached and semi-detached homes, townhomes, and apartment condominiums in the City of Guelph. Data not independently verified. For information purposes only. Compiled January 2019.

Looking Back at the Year

As we just start seeing some frigid temperatures and snow on the horizon, we’ve taken a look back at the uneventful 2018 Guelph real estate market and form predictions for the year ahead. With regulatory and demographic pressures weighing down the buoyancy from the stellar 2017, fewer people were

talking about the housing market throughout last year. 2018 median housing prices across all forms increased by a modest 0.7% to $477,500 — a drastic change compared to the nearly 21% increase from 2016 to 2017. Condo apartments saw the best annual gains, with their median sales prices jumping

from $310K to nearly $328K (an increase of 5.6%). This slow growth wasn’t the result of a traditional supply vs. demand economic model, though, since the number of listings only decreased by 2.3% vs. 2017 compared to a drop in sales of over 10% to only 2064 properties. Fewer homes sold in 2018 than

during any of the previous five years, pointing to a shift whereby home owners were simply staying put and not moving. Again, condo apartment bucked this trend with more units listed for sale and more actually selling; this points to evidence of Guelph’s slowly shifting demographic to the more dense housing types. By no means does this slowing trend indicate that the city is shifting to a market that favours the buyers over the sellers, however. New listings coming on the market are an indicator

of supply. Sales are the indicator of demand. The sales-to-newlistings ratio thus becomes an indicator of both and is the best expression of what type of market we are experiencing. The higher the ratio, the greater the demand relative to supply. A ratio below 40% points to a buyers’ market, 40-55% indicates a balanced market, and above 55% is in a sellers’ market territory. 2018 saw an sales : listing ratio of 69%, with 2064 sales for 3006 listings — still firmly in a sellers’ market that continues a more

than 10-year journey in this range. Guelph’s resale market is still dominated by detached properties (52% of all homes sold). That said, detached home sales did account for a much larger-than-proportionate sales drop with more than an 18% decline. This trend could be evidence of a shifting demographic market away from less affordable detached homes towards smaller and less expensive forms such as townhouses and condo apartments.

A Crystal Ball for 2019

Predicting real estate market trends for the next year has always been as much art as science, with even many professionals disagreeing on the future. Economist Ryan Berlin made an astute and uncontroversial observation, though, when he commented that the “housing market and economy are

becoming increasingly intertwined.” General interest rates — which are naturally linked to

mortgage rates — increased three times from 1.0% at the start of 2018 to 1.75% by the end of the year. The Bank of Canada has not ruled out future increases in 2019, but has noted that the economic outlook has slowed. Consequently, the mortgage rates of today may look very similar to those for the rest of the year — and rate stability is always a good indicator of real estate sales stability. Over a year ago, Bill B-20 imposed large changes on the Canadian mortgage market. The most significant change for home buyers required uninsured mortgage consumers (including those refinancing their home) to qualify using a new minimum qualifying rate. This stress-test rate is be the greater of the five-year benchmark rate published by the Bank of Canada or the lender’s mortgage rate +2% (whichever is

higher). Previously, uninsured buyers with more than a 20% down payment only needed to qualify at the lender’s actual mortgage rate, which is almost always significantly lower (by 1-3%) than the benchmark rate. Economics predict that the effects of the stress test requirements will continue to weigh on the real estate market throughout 2019 as it did in 2018. Fortunately, Guelph has proven to be resilient to downward affordability pressures. As buyers with reduced affordability are priced out of the Toronto market, they will often drive until they qualify for the home that best meets their family’s needs — and often shop in Guelph. After full consideration, we believe that Guelph will continue to experience a strong real estate market in 2019, with continued moderate median price growth under 3%. The biggest strength will continue to be the growing condo apartment sector, both for resales and new builds. If you want to stay on top of the 2019 market, contact your Home Group Realty sales professional today!

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