We wanted to do a quick recap of what happened in the Guelph real estate market in 2018. We will look at my predictions for the Guelph real estate market in 2019 and how you can best capitalize on next year’s market.
Real Estate Sales in the Guelph Market
We are anticipating ending the year with about 2177 sales. This will be down 8% from 2017 and is also the lowest amount of sales we have had since 2012. Both the stress test rules that were implemented in January this year and the rising interest rates have reduced affordability for purchasers and resulted in fewer buyers.
Average Home Sale Price in Guelph area
If you look at the average sale price for the entire year across all housing types it has remained flat from the average in 2017. However, if you compare the 4th quarter of 2018 to 2017 we are up 3% this year. Condo style apartments were the big winner with a healthy increase of 8.5% from last year. With reduced affordability, it is no surprise that the condo market is outperforming other housing types.
Average Days To Sell a Home in 2018
The average days to sell a house in Guelph is 26 days which is up 30% from 2017.
Percentage of Listings Selling
Another big change is that the percentage of listings this year that are successfully selling has reduced from 73% to 64%.
What are the Guelph real estate market predictions for 2019?
Most economists are forecasting for a “moderate” real estate market over the next year. CREA is more optimistic predicting a 5.3% increase in the number of sales and a 3.3% increase in the average sale prices for Ontario. Where CMHC is anticipating a minor drop in both housing prices and sales next year.
The Bank of Canada rate is sitting at 1.75%, after 5 price increases since summer 2017. This is more increases than we have seen in the previous 10 years. Rates are anticipated to get up to 2.25-2.5% in 2019 and 3-3.5% in 2020. This will have a huge impact on the monthly payments of people that are renewing their 5-year terms next year. This could be an issue for lots of Canadians who are already very leveraged. Mortgage rules are anticipated to further tighten through 2019.
For buyers, you will want to make sure you get pre-approved before you start looking. Someone who would have easily qualified for a mortgage a few years ago could have trouble to qualify now. Also, by getting a pre-approval you can lock in the current rate before they go up again.
As affordability continues to weaken we will see an increased demand for lower priced homes such as condos and townhouses. This is a great opportunity for people who are thinking about upsizing. You can sell your lower priced house in a strong market and buy a more expensive home in a less competitive market.
For downsizers who are selling larger houses, this could be a tougher year. If you are selling a very expensive house, you will probably be better to sell your house first and buy second. Sell your home in the 1st quarter while inventory is low and prior to interest rate hikes.
From an investors perspective, the decreased affordability is going to force more people who would have historically purchased to rent. This is going to increase the demand for higher end rentals in Guelph. Just make sure if you are purchasing a rental property that you account for interest rate increases in your cash flow analysis.