Like other housing markets across the country, the Guelph real estate market has witnessed record-breaking growth, from sales activity to prices. Thanks to historically low interest rates, out-of-town homebuyers, and demand that’s outpacing supply, the southern Ontario town is reporting impressive numbers. But is this rapid growth kicking young families out of Guelph?
For a long time, many younger households from major urban centres had relocated to suburbs, small towns, and rural communities to access cheaper housing options. During the coronavirus pandemic, the tables have turned: young people in these non-metropolitan cities are potentially leaving these places for somewhere more affordable, but with skyrocketing valuations in communities big and small, finding these affordable housing pockets is becoming increasingly challenging.
Some have speculated that conditions will normalize once the COVID-19 public health crisis subsides and families return to the city (it’s debatable). Until then, new homebuyers are considering their options and determining if it is worth it to stay in a municipality with sky-high real estate prices.
Is the Guelph real estate market’s upward trend an exaggeration? Consider that February was another record-breaking month for Guelph, and the city’s local market shows few signs of slowing down.
Are Climbing Guelph Real Estate Prices Pushing Locals Out of the Market?
According to the Guelph & District Association of REALTORS®, residential sales surged 33.2 per cent year-over-year in February, hitting a new sales record for the month of February. In the first two months of 2021, home transactions have already increased 23.6 per cent from the same time a year ago, totalling 738 units.
In February, the MLS® Home Price Index (HPI), which is considered more accurate than using median or average price measurements, reported an annualized 26.3-per-cent gain to $734,000. All property types advanced year-over-year in February:
- Single-family homes: +26.1% to $761,000
- Townhouses: +29.4% to $546,200
- Apartment condos: +20.9% to $418,200.
Overall, the average price of homes sold in Guelph soared 25.4 per cent to $853,539. The year-to-date average price advanced 27.6 per cent to $825,083.
“Home sales weren’t the only figure hitting a new record last month – new listings also reached the highest level of any February in history, providing some much-needed supply to the market,” said Sabrina Essery, President of the Guelph and District Association of REALTORS®, in a statement. “However, given the current strength in demand and the appetite of homebuyers, this new supply did little to raise the level of available inventories, which are still sitting at record lows. With fierce competition among potential buyers for anything going on the market now it’s no surprise that price gains have actually accelerated, and price levels continue to reach new highs.”
Indeed, listings have been a focal point for industry experts. New listings rose 35.7 per cent to 620 in February, while active residential listings tumbled 26.7 per cent to 293. The months of inventory came in at 0.6 by the end of February, down 1.1 months at the same time a year ago – the long-run average for the month of February is 1.7 months.
Upward Mobility in Home Prices Across Guelph?
The real estate industry is debating if Ontario exiting the stay-at-home order will increase or decrease housing prices. Moreover, the housing sector is deliberating if there is enough new inventory coming to market to allow valuations to hit the pause button on their ascent.
Industry experts have been honing in on monthly Canada Mortgage and Housing Corporation’s (CMHC) new home construction data for a clearer picture of inventory changes over the course of the year. In January, housing starts in the city of Guelph declined just over 66 per cent year-over-year to just 17 units, down from 51.
Until there is more stock, homes will continue to see upward mobility. Guelph Today compiled some of the latest developments in the Guelph real estate market over the month of January:
- 12 homes were sold for over $1 million, up 300 per cent from last year.
- 4 per cent of Guelph residential properties were sold for $750,000 to $1 million.
- 35 per cent of homes were sold in the $600,000–$750,000 range, up from 18 per cent a year ago.
- 70 per cent of homes sold for $500,000–$600,000 were condominiums, and nearly every detached home in this price range sold over asking price.
It makes sense that Canadians piled on mortgage debt in this hot housing market. According to Statistics Canada, mortgage debt climbed 7.4 per cent in November to nearly $1.66 trillion. And the trends will continue, warns Royal Bank of Canada economist Robert Hogue, who wrote in a January research note:
“We see little that will stop activity or prices from reaching new highs in 2021. Historically low interest rates, changing housing needs, high household savings and improving consumer confidence will keep demand supercharged. A dearth of supply will maintain the heat on prices.”