Guelph has long been considered one of the best cities in the province of Ontario. From its highly ranked schools to the natural sights, Guelph maintains a lot of enticing characteristics that are incomparable to other places in Ontario and the rest of Canada. And so far, this has contributed to an explosion in sales and prices in the Guelph housing market during the coronavirus pandemic. This follows the nationwide trend at a time when activity is typically subdued.
The Guelph real estate market had a record-breaking July, according to the Guelph and District Association of REALTORS®. In July, home sales surged 23.9 per cent year-over-year, an all-time high for July. In total, 383 units were sold in that month.
Real estate prices also surged during a busier-than-normal summer month. The composite benchmark for Guelph climbed 11.3 per cent to $611,700. For comparison, single-family homes went up 10.4 per cent YoY to $633,500, while townhouse row units increased 11.7 per cent to $440,800. Apartment prices also gained 16.1-per-cent to $375,300.
Overall, the average home sold was $641,228, a 16.4-per-cent jump from the same time a year ago. Year-to-date, a measurement that has impacted a lot of the smaller markets, advanced 12.4 per cent to $626,317 compared to last year.
Record-Breaking Activity in the Guelph Housing Market: Will it Last?
A major factor in explaining the spike in Guelph real estate has been the lack of new listings. Although inventory levels have rebounded from April’s dips, demand continues to outpace supply. Active residential listings fell 47 per cent to 310 units by the end of July, and the months of inventory were 0.8, well below the long-run average of 2.1 months of supply for July. This is an important metric, gauging the number of months it would take to sell current stocks at the present rate of sales activity.
This has left the Guelph housing market in seller’s market territory, which could elevate prices that would keep them at or near record levels.
Can this record-breaking activity be sustained? All the indicators point to continued growth for the remainder of 2020. What are some of the factors involved?
Interest rates are at the lowest they have ever been. The Bank of Canada (BoC) has eased monetary policy, resulting in a 150-basis-point cut in the benchmark rate. Also, the central bank reduced the five-year mortgage rate to below five per cent. The BoC has suggested that policy tightening will not happen until at least 2022 or 2023. This is good news for homebuyers who want to save on their mortgage costs, allowing them to broaden their horizons in the Canadian real estate market.
In recent months, there has been trend in some of Canada’s largest cities of urban dwellers in Toronto, Vancouver and other hyper-dense municipalities, in favour of suburban or rural communities such as Guelph. There are two reasons to explain this trend: the coronavirus pandemic and remote working. Since the virus outbreak affected the big cities more acutely, people have become concerned about COVID-19 and other illnesses leading to widespread infections. With more preventative measures being employed, corporations are instituting work-from-home policies to allow people to perform their functions remotely, which affords homebuyers the opportunity to look beyond the urban limits.
As Guelph experiences a surge in housing demand, supply has been unable to keep up. This has sparked fierce bidding wars as 70 per cent of homes in the area are sold over the asking price. For many years, this had not been the case for cities outside of Toronto or Vancouver. While it is frustrating for homebuyers, it validates the idea that Guelph is a seller’s market, and will remain so for the foreseeable future.
What Will the Next Few Months Bring?
No matter whom you ask in the housing sector and the broader economy, the common theme is uncertainty. As we teeter on the edge of cold and flu season in the middle of the coronavirus pandemic, many experts are unsure what the next few months will bring to Guelph, and other markets across the country. If infection levels stabilize and the province avoids another lockdown, then the consensus is that Guelph and other markets will continue to see positive growth in housing prices and rising sales activity.
In contrast, should the number of infections spike, leading to another round of lockdown measures, then there’s a chance that the economy, and activity within the Gueph market, could soften slightly. However, if this past spring taught us anything, it is that many of Canada’s local markets are remarkably resilient, and have the capacity to rebound with gusto from whatever else 2020 throws our way!