Real estate usually takes a seasonal dip in the summer, but this year it’s amplified: those who would normally take summer vacation in July did so with extra gusto, starting with the entrance of Stage 2 of Ontario’s re-opening plan on June 30.
And it’s been felt in the local real estate market.
Parents can be heard: Going to the beach? “Yes even if it’s raining, we’re going”. Camping? “Yes, and we’re going to enjoy every minute of it.” Golfing? “Yes and I may golf another 18 afterwards”. A picnic? “Absolutely, I don’t care about the goose poop”.
Anything but shopping for houses, it appears.
What’s happening in the market?
The first half of 2021 was remarkable to say the least. Every month in 2021 has outpaced the same month of 2020, finishing the first half with an average price over 25% higher than last year.
But like any data, you need to look beyond the numbers and understand what is driving this. Starting in March 2020, real estate sales dropped off a cliff and it wasn’t until mid June that people came back to the market. So of course, 2021 gains look impressive but this is compared to a weak time in 2020.
The true market comparison will be coming in the coming months, where 2021 volume is compared to much stronger months of 2020- July, August and September. “Brace yourselves for some declining numbers”, says Ryan Waller.
Buyers can take advantage of this lull
A combination of rising inventory, seasonal slowdown and COVID freedom has contributed to a rapidly changing real estate market in Guelph as of June 30th when stage 2 of the provinces re-opening plan set in.
Two weeks ago, 64% of homes were selling above their asking price. Last week, it was 53%. This number is likely to be sub 50% by end of July. Houses are starting to sit on the market longer as well.
This is encouraging for buyers, who felt like they didn’t have a chance earlier this year. In March for example, over 77% of homes sold above their asking price.
Two price brackets we’ll be watching
We’ll be watching two segments closely over the next 6 months: The price brackets of $400-$600K, as well as the $1 million plus price bracket. Both of these segments represent about 25% of total listings and are a good indicator of a changing market.
The $400-$600K bracket is changing from freehold homes to condo sales, while the $1 million + market is starting to show signs of saturation. This segment only represented about 10% of Guelph listings in 2020.
Overall, Beth and Ryan Waller still anticipate the 2nd half of 2021 real estate to be less dramatic than the first half. At the beginning of 2021, they had predicted a full year increase of 11% which would mean there will be some softening in the coming months.
Feeling a pinch in the rental market
With rising real estate prices in the first half of 2021, it’s made it far more difficult for those looking for a rental in Guelph. In many cases, tenants find themselves competing with other tenants and even paying over the asking rent price.
Many who may have been priced out of the housing market as buyers have turned to rentals as an alternative. Combined with a traditionally low vacancy rate in Guelph, it’s become a challenging market.
Existing tenants who have been in rentals long term are finding that if they need to move or relocate, that prices are substantially higher than they were even a few years ago. In some locations, it’s just not affordable any longer in Guelph for many.
As of last Friday, there were only 18 active leases available through the Realtor system in Guelph for a city of close to 150,000.
Source: 2020/2021 GDAR data, City of Guelph single family residential home sales.