There were many predictions on how the housing market would be impacted during the initial COVID lockdowns, with a major concern of a market correction.
This didn’t happen.
Instead, there was a pause in activity and the spring market was squeezed into June, July and August where buyers were scrambling to buy homes in Guelph.
Through August, overall dollar sales have increased by almost 6%, at the same time the number of homes sold overall has decreased by 6%. As a result, this means that the average price of a home in Guelph has increased by about 12% this year for single-family homes.
This doesn’t mean that all Guelph homes have increased 12% in price. Although there is some appreciation, the main contributor is s greater number of higher-end homes selling since the start of COVID, which is driving the overall average price up.
There have also been some new trends that have emerged in the past few months, including a spike in popularity (and prices) of Guelph homes with pools, backyard entertaining areas and homes with landscaping already completed. Lumber, appliances and contractors are in huge demand this year as people do more home renovation projects instead of getting away. Sales in South and East Guelph have been leading the way as they are more commutable to the GTA.
And like many industries, COVID has changed the way real estate transactions are handled: from the increased safety precautions of REALTORS® showing houses in less time, with fewer people and less touching to a dramatic reduction in public open houses.
In this Spotlight, Beth and Ryan Waller, Guelph REALTORS® discussed the huge influx of Guelph home buyers coming from the GTA, which also is a key area for COVID cases. Although public open houses are permitted, not everyone is participating. “Personally, we don’t believe it’s either in the best interest of a buyer or seller to participate in public open houses right now,” says Beth Waller. “Of the open houses that are happening, you have to wonder who is benefiting, while weighing the potential risk to others.”
September is traditionally the start of the “second spring market”, where listings rise as sellers have their kids back in school and want to make a move before Christmas. Halfway through September this year, sales have averaged close to 4% over asking price despite an initial rise in listings. Those new listings were quickly bought up.
Almost half of all listings sold in Guelph in September were homes that were on the market 7 days or less.
With COVID cases rising in Ontario, are we going to see another surge in Guelph home sales as people rush to buy a home ahead of a potential lockdown?
It may be one of the reasons that over half of all homes listed in Guelph have sold over the asking price in the past 8 weeks on average.
“We get asked fairly often how the market performed during COVID. It’s not in the past - we’re still in the midst of COVID,” says Ryan Waller.
Using the initial period in March as a guide, it would be safe to say that if a wave 2 of COVID does happen, we could expect similar behaviour in the market. That is, a “quiet period” of little activity, followed by a rush of buyers. Should this play out over the same timeframe, it would mean that the typically slow month of January would be the start of the next buying frenzy in the market.
With just over one month’s inventory available, Guelph is already in a strong seller’s market. Add in record low interest rates (it’s not hard to find a mortgage under 2% these days) and you have a recipe for an extremely aggressive and sometimes irrational seller’s market in the coming few months.
Source: GDAR 2018-2020 single family residential home sales.