Guelph could soon join cities such as Toronto and Vancouver in the million-dollar club, comprised of cities with homes with an average resale home price of at least $1 million.
The latest data provided by the Guelph & District Association of Realtors shows the Guelph area is on the fringes of the club, with the average price of homes sold in October a record $964,566.
Using the average home sale in October as a benchmark, and assuming the general rule of thumb of using a household income divided by 4.5 as a mortgage pre-approval, the household income to enter the market and buy a house at that average price would be upwards of $200,000 per year, according to Natalia Jackson, a mortgage broker with Natalia Jackson Mortgages.
Jackson said the standard down payment requirement of five per cent down on the first $500,000 and 10 per cent down after that, the expected down payment in Guelph using the average home price would be $71,456.60.
Assuming a variable rate, which is the lowest possible rate currently at 1.45 per cent, on a five-year fixed-rate mortgage amortized over 25 years, the monthly mortgage would be $3,691.07.
A fixed-rate mortgage at 2.54 per cent on a five-year fixed mortgage amortized over 25 years would come out to $4,179.39 in monthly mortgage payments.
This does not include the annual property taxes, hydro, gas or water usage.
The dollar value of all home sales in October 2021 was $387.8 million, increasing by 6.8 per cent from the same month in 2020. The number of new listings saw a sharp decrease of 22.1 per cent. from October 2020.
There were 409 new residential listings in October 2021, the lowest number of new listings added in October in more than a decade.
The reasons behind the spike in housing prices comes from a slew of different reasons, according to Guelph & District Association of REALTORS president Sabrina Essery.
“I think, again, it’s supply and demand. So, that’s always a big driver as if demand is high and supply is low then you are going to have that supply issue, and the prices will rise due to the lack of supply,” said Essery.
Despite the soaring average prices in Guelph, the average price to purchase a home in Guelph drops significantly when looking at the year-to-date average price comprising the first 10 months of 2021 with the region has seeing an increase of 25.4 per cent with the average year-to-date price at $878,899.
The Multiple Listing Service (MLS) Home Price Index (HPI), which tracks price trends more accurately than only using average or median price measures shows the composite benchmark price was $827,300 in October 2021, up by 26.7 per cent compared to October 2020.
Essery said the talk of the interest rate increase could help level the market slightly, but when looking back to December 2020 the increasing prices and competing offers have left her unsure if the market will see a dip.
"I wouldn't want to speculate on whether things are going level off or if they are going to continue to increase," said Essery. "It will be very, very interesting if we plateau and then increase again, or plateau."
