Guelph Market Update for March 2022

Below you will find a Guelph Market Update for March 2022 which will provide you with information on the local real estate market and recent sales activity in specific Guelph neighbourhoods. Don’t hesitate to contact us if you have any questions or if you are ready to move forward with the next step!

Guelph Market Update for March 2022

As Guelph’s market naturally cools will the proposed changes by the federal government grind our market to a halt?

Yes, the market is cooling slightly, but we are still in an extreme seller’s market and we are predicting to be in a seller’s market for the next several months. On April 7th the Fed announced in their budget several initiatives to increase housing supply, assist first-time buyers and slow down investors.

Guelph’s average sale price in March was $969,986, which is up 1% from last month and 30% from last year. 87% of the houses that sold went to multiple offers, which is down from the 93% that we had in February. Houses are selling on average for 14% over their list price which is down 5% from last month. This was likely caused by the 24% increase in new listings that we had. More inventory is good news for buyers as there are more choices.

Interest rates are going up; there is no arguing that. Inflation continues to be very high, and supply chain issues have gotten worse, not better. On April 13th, many banks and analysts are predicting a 50 basis point hike in interest rates. They anticipate interest rates to continue increasing throughout the year in an attempt to reduce inflation. We could see a prime interest rate at 2.25 to 2.75 by the end of this year. Although this would be a dramatic increase within a 1 year period, these rates are still historically low.

The government’s budget had several changes. 10 billion dollars for new housing, 4 billion to the municipalities to speed up the approval process, as well as the extension of some existing initiatives.

For first time buyers, there was the new Tax-Free First Time Buyers Saving where $40,000 of tax-free money can be used toward the purchase of a home, similar to how the RRSP works. They have proposed doubling the first time home buyers’ land transfer tax credit to $10,000. Rent to Own initiatives are also proposed to help renters get into the market.

To slow investors they are proposing a 2-year ban on Foreign buyers being able to purchase in Canada, there are exceptions if you are a student planning to stay or here on a work visa. They are also introducing an anti-flipping policy that will tax people buying and selling a house within a year unless they have a valid reason. They are proposing to get rid of blind bidding.

So the big question is will this make the market go cold, or prices come down. No, not significantly at least, demand is still way outpacing the supply, they can’t build houses fast enough. This is something that can’t be fixed this year or next, we can slowly work toward it. But on the other hand, Trudeau has committed to increasing immigration to the highest in history, which will further put a strain on the supply of housing.

In the meantime, as the market changes, sellers will have to adjust their expectations of how much over-listing their house will sell for, and there is the possibility they won’t get multiple offers. The days a home is on the market are slowly going up, but houses are selling fast, and people are still getting great prices for their homes.

For buyers, there is a bit of a silver lining; you can find houses where you don’t have to compete. As of April 7th, there were 42 homes on the market in Guelph that have been on for nine or more days. So these are the ones to look at if you don’t want to compete. We are also seeing the return of home inspection and financing conditions on offer that aren’t going to a competition. Having conditions can eliminate some of the risks for buyers. If you want to buy this year, buy now as interest rates are the lowest you are properly going to see for a while.

I am Brad Wylde with GoWylde Real Estate, a group of real estate professionals that are passionate about helping people grow their wealth through real estate.