Buying and selling are two of the most constant activity streams that define the real estate industry. However, if you take a closer look at what’s really happening in Guelph, you may be surprised to learn the local real estate market is going through a major transition.
“I think we’re moving into an exciting phase where we’re seeing more drastic renovations and conversions to homes beyond a new kitchen, a new garage or a new roof,” suggests Hudson Smith, head of a team of local realtors at the Hudson Smith Real Estate Group. “We’re talking new footprints, massive additions, and also a considerable number of houses coming down and being rebuilt as infills.”
What does that tell us about the real estate climate in Guelph, a market that increased dramatically in the past decade? According to Smith, it’s reflective of a change in mindset for buyers who don’t want to compromise when it comes to owning the house or the property of their dreams.
“It tells us that people are understanding that new build opportunities just don’t exist anymore in the detached large lot category,” he said. “As new subdivisions open up in Guelph, there used to be a number of premium lots with privacy and maybe a little more flexibility in terms of what you could build and what you could add. As intensification has increased and the sprawl has slowed, we’re seeing people more than ever thinking outside the box to achieve their real estate goals.”
Smith suggests active buyers are focusing their search on more desirable neighbourhoods and paying more to acquire homes or lots that offer all the elements that can’t be changed – things like location, lot size or building footprint.
“I think buyers are just thinking on a much more creative level,” he said. “They’re not going into homes thinking, ‘oh, it doesn’t have the same space as my house or it doesn’t have this and that.’ People are buying and creating it themselves through renovations. And a lot of people aren’t moving. They’re staying where they are, and completing major renovations.”
Another aspect of this new real estate phase is a willingness from buyers to spend money on a house, only to tear it down and completely rebuild. Smith said that with the spiralling value of real estate, the math actually works depending on the lot and the individual. Purchase prices based on site value have grown higher than ever, and people are willing to pay because it’s exactly where they want to be.
“You have to consider what’s more affordable,” said Smith. “A drastic renovation to an existing property or taking it to the ground and starting from scratch. The renovation part is probably always cheaper, but you have to ask yourself, ‘am I left with the finished product I want?’ Sometimes with an older home with a lot of character those things can marry together well. But when you do start from scratch, you can add things like ceiling height and exciting features that you just can’t create even with a large reno.”
The changes to the real estate market are also impacting sellers who may have been considering investing in renovations to increase the sale value of their home. Smith suggests such steps may not be necessary.
“What it means for sellers is, those sellers sitting on nice lots, what their lot is worth is probably outpacing what their house and lot is worth together. If people are considering improving their home prior to selling, be careful what you are putting in when understanding your audience. Perhaps just basic cleaning and staging will be sufficient if a large number of your purchasers are buying for what is outside the home. I’ve personally been part of purchases where people are planning on tearing the house down and the price has still gone up $900,000 to a million dollars for the lot.”
Hudson says these changes in the Guelph real estate climate have been difficult on buyers trying to get in. However, that same creativity needs to be applied at the entry level.
“Improvements such as basement suites, perhaps buying the house that needs work and putting the sweat equity in or even now, the ability to build garden suites may open another opportunity to have mortgage help and improve the value of the property. Working with an experienced realtor always helps, whether it's finding the site to build your dream home, or getting past the challenges of trying to buy into a market on Guelph's trajectory. Maybe the road map is just outside the box.”
All of this means is that it’s more important now than ever to conduct your buying and selling of real estate with the help of an experienced professional who knows the Guelph market. Whether you’re looking to buy or sell, contact the Hudson Smith Real Estate Group, a trusted team of local real estate professionals. Visit them at 824 Gordon Street. Or call 519-821-3600.