House prices in Guelph are trending up while the number of homes being listed is down and some experts say that could be the makings of a return to the extreme seller’s market of 2017.
With even fewer houses on the market and higher selling prices this year, it could get even more extreme, said Matthew Bennett-Monty, president of the Guelph and District Association of Realtors.
“It’s actually a little bit scarier if you break the numbers down because we are doing it with over a third fewer listings that we are selling and we are selling dollar volumes that are almost 20 per cent higher than they were in 2017,” said Bennett-Monty by phone on Wednesday.
The composite benchmark price for a home in Guelph and district was $566,800 in January 2020, according to the MLS Home Price Index. That is up 8.5 per cent compared to the same month last year.
Bennett-Monty said the trend of people selling their houses in bigger cities like Toronto and buying for relatively less money in Guelph and area is continuing.
“With use being in close proximity, it’s natural that we see some migration,” said Bennett-Monty. “There are still some folks out there that will drive the 401 to save on some house costs.”
Competition driving up house prices for sellers is great, said Bennett-Monty, but those same people often must then purchase in the same seller’s market. Unless someone is downsizing or moving to more depressed market, he said it is difficult to capitalize in Guelph.
New homes are being built in Guelph and Wellington County, but Bennett-Monty said as soon as they come on the market many are being swallowed up by people migrating from larger centres, as well as investors and speculators.
That isn’t making it any easier for first-time home buyers who want to enter the market in Guelph.
“It’s so tremendously difficult to enter this marketplace. The lending requirements are not favourable,” said Bennett-Monty. “I find myself consoling buyers and congratulating sellers. Our hearts really go out to first-time home buyers, there’s no question.”
Coming up with a deposit on a single-family home that can cost half-a-million dollars or more can be very difficult without support and new stress tests put in place for first-time buyers don't make it any easier.
“Having to come up with 10 per cent down and qualify through a stress test — with an average cost of approximately $560,000 — that’s a tremendous chunk for younger folk who are not in the marketplace,” said Bennett-Monty. “You need someone to lean on, whether it be a really good friend, a rich uncle or mom and dad. You need that arsenal behind you, for sure.”
In recent tweets, TrilliumWest sales representative Kelly Caldwell said she hopes Guelph home buyers have good representation.
“The amount I am seeing folks grossly overpay for homes is truly disturbing,” said Caldwell on Twitter. “Cooler heads will prevail, I hope. Deva-vu all over again with an out-of-control market.”
Despite conditions that seem similar to those in 2017, Bennett-Monty said he isn’t quite ready to lock in his prediction for the same thing to happen in 2020.
“We look back at the last five years and there hasn’t really been one year over the next where someone can accurately predict that year, because we are seeing erratic behaviour in terms of valuation and inventory,” he said.
I really hope that Guelph home buyers have good representation right now. The amount I am seeing folks grossly overpay for homes is truly disturbing. Cooler heads will prevail, I hope. Deja vu all over again with an out-of-control market. #guelph #realestate— Kelly Caldwell (@kcaldwell) February 11, 2020