The Guelph real estate market got off to a cooler start in 2018 than many had predicted. Home sales have continued to drop on a year-over-year basis, leaving buyers, sellers and Realtors alike wondering if the market will continue to adjusting to regulatory changes for the foreseeable future. Did the new mortgage stress tests take a bite out of the real estate market?
While many expected that the market would adjust to the new mortgage stress test after the first quarter of 2018, that no longer seems to be the case. Guelph real estate sales were down 20% in May compared with the same time last year. But it’s not just the mortgage stress test that’s slowing down the market. According to the Bank of Canada, rising interest rates are playing their part as well. The BOC is expected to hike the overnight rate at least once more before the end of the year, this will increase pressure on an already swooning real estate market.
While sales on properties under $500,000 remain brisk, listings above $500,000 are beginning to pile up. I believe that many buyers wanting to move up from their sub $500,000 starter homes are having a difficult time qualifying at $600,000 to $800,000. The new mortgage stress test, higher interest rates and the accumulation of household debt are no doubt to blame.
While sales are down 23% year to date for Guelph compared with 2017, a lack of inventory has helped to keep things competitive. 54% of Guelph MLS sales in May went for full price or more. While this is a clear indicator of a strong seller’s market, over the first two weeks of June, the number of homes selling at or over asking price has slipped to 41%. This trend should continue as summer is a traditionally slower time for real estate sales.
The average sale price in Guelph for May was $523,146. That’s a decrease of 1.3% from May 2017.
Buyers: If you’ve been waiting in the wings for a deal, 2018 could be your time to buy! You will have more choice and multiple offer scenarios will still be a reality but more hit and miss. Homes that have been on the market for over 30 days should be open to negotiation. For the first time in a long time it may be possible to buy significantly lower than list price.
Sellers: Pricing your home correctly will be more critical than ever in the coming months as there will be more choices for buyers. Take the time to prepare your home for the market because you will be competing with other sellers. Multiple offers will still be possible but not as common as we’ve seen in the last year or two. Make sure your Realtor has an up to date marketing plan.
Dean Manton is Guelph’s real estate expert! Buying or selling, put his 20 years of experience to work for you!
