It's too soon to tell how new lending rules will affect the local real estate market, says the president of the local real estate association, as housing prices in Guelph continue to rise.
Kristi Mercier, president of Guelph and District Association of Realtors, said a lack of homes on the market, referred to as inventory, is continuing to cause the rise in prices but that trend has slowed somewhat from the same time last year.
“At the beginning of the year it was pretty crazy, we did not have a lot of inventory but still had a lot of demand. That drove prices up quite a bit. It put a lot of stress on buyers going into multiple offer situations time and time again,” said Mercier.
A lot of prospective buyers have been waiting for a year or so to buy a house, said Mercier, but are being priced out of the market.
"They are getting squeezed because the price is still going up,” said Mercier.
Guelph is still dealing with lower than normal inventory, said Mercier, but more homes are available on the market today than the same time last year.
The total inventory at the end of December
There were 4,377 new listing in Guelph in 2017, up 9.7 per cent over the previous year.
“Things are balancing out. I wouldn’t go so far as to say it’s balanced, but balancing and becoming a little more reasonable,” she said.
As long as inventory is low, said Mercier, home prices will continue to climb.
“Hopes would be that we do get some more inventory coming on the market, because that’s what we need to help stabilize things,” she said.
The average price of a home in Guelph for 2017 was $530,505, up 20 per cent over 2016 and an almost 94 per cent increase in home prices 10 years ago.
The price increase for a home in Guelph has tempered somewhat from the spike this time last year.
“(Prices) are still growing. They just aren’t growing as fast as they were before,” said Mercier.
Mercier said an increase in the price of homes is causing some buyers to settle for a smaller home or to move to a less expensive area, which she calls ‘drive until you qualify’.
As a sales representative based in Elora, Mercier has seen that trend first hand.
“If people really want a particular type of home, they are looking in other areas where they can still get it at a price they afford or they are changing their perspective and what is important to them,” she said.
Mercier said it is too early to tell how new stricter mortgage rules will affect home sales.
Home buyers who don’t need mortgage insurance will be required to undergo a new ‘stress test’ to prove they could handle a future uptick in the lending rate.
Some experts are expecting a slight slow down of the housing market as the mortgages some buyers qualify for may not be as large as in previous years.
In its market survey forecast, Royal LePage said some potential buyers looking to upgrade may delay listing their homes as they will not be able to access sufficient financing for a planned new home.
The company expects a surge in sales of lower-priced properties due to the diminished affordability.
“We will just have to see what happens and hope for the best,” said Mercier.
With files from The Canadian Press