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The Q3|2017 Guelph Data Report Summary

If you’ve paid any attention the media lately, it can seem as though real estate prices all around us are plummeting and that the markets, as we know them, are about to collapse.

Although it is true that the Guelph real estate market is “down”, it is also true that the Guelph market is simultaneously “up” as well.

How does that happen?

With Guelph’s 3rd Quarter Data Report just being released, the numbers tell a showing tale of how our market can be “up” and “down” at the same time.

For instance, if you compare the entire City of Guelph’s Median Detached Sale Price for 2017’s 2nd Quarter of $564,000 to 2017’s 3rd Quarter of $540,000 then, yes, the Guelph real estate market is surely “down” 4.3%… Oh nooo!

However, if you take a wider snapshot of the overall Guelph market and compare our figures year over year from 2016’s 3rd Quarter Median Detached Sale Price of $475,000 to this years 3rd Quarter Median Detached Sale Price of $540,000 the market is surely “up”, and realistically, comparing figures year over year is a much more accurate snapshot of exactly how any particular real estate market is performing.

There’s no doubt that the Ontario Government’s intervention this past spring completely threw a wrench into our heated real estate markets inner workings, but let’s face it we were on a path to self destruction and, quite frankly, our real estate market needed to be to sat down on its living room couch and told that its friends and family were going to disown it if “things didn’t change”.

As effective as the Government’s plan was to steer our ships away from the inevitable disaster we were all headed towards, the Guelph real estate market has most definitely weathered the storm and now that we’re nearly 2 Quarters away from that last bomb being dropped (Ontario’s Fair Housing Plan) approximately April 19th, 2017, the concrete evidence is now here to support it.

Given the above, let’s take look at a few key points from Guelph’s 2017 3rd Quarter Data Report and see exactly what it all means:

  1. Median Detached Sale Price up 13.7% year over year.

We’ve already touched on the fact that 2017’s Q2 to Q3 figures were misleading in showing that the market was “down”, but if you look at the year over year figures you can see that the Guelph market is actually “up” nearly 14%. Let’s not forget that, in Guelph, a 5-7% increase in our real estate market year after year was considered to be normal and most people were happy to see that kind of consistent and sustainable growth. Have we gotten too greedy after seeing house prices rise nearly 20-30% in only 1 year? Perhaps this is true, but surely we can all be grateful that, despite prices falling slightly since 2017’s 2nd Quarter, we’ve still effectively managed to realize a “2-years-in-1” type of growth since this time last year and, to be honest, that’s nothing to shake a stick at.

  1. East Guelph Median Detached Sale Price up 25.0% year over year AND up 4.8% from 2017’s 2nd to 3rd Quarter.

I think it’s important to point out that East Guelph is the only area of town that saw any kind of an increase from Q2 to Q3, while the rest of Guelph was on the decline.

When comparing the East end of Guelph to other areas in the city, typically the difference between East and South Guelph was undeniably noticeable when it came to home sale prices. For many years, homebuyers in Guelph simply knew if you wanted a cheaper home you had to stop looking in the South and drive approximately 9 minutes North/East and you could literally save tens of thousands of dollars and purchase the exact same home, just in a different end of the city.

This past year’s real estate market has since turned that fact into fallacy and, if you look at the numbers, that same deal can no longer be found as both of these areas of Guelph are pretty much on par with one another as far as home sale prices go. 

The fact that Guelph’s East end Median Detached Sale Price grew 25% year over year while the rest of the city grew just under 14% is pretty impressive, but what’s equally as impressive is the fact it continued to rise, by nearly 5% (or approximately 1 year’s historical growth), in the matter of just 3 short months while at the same time the rest of the cities prices were declining.

Based on these latest figures I would have to say that East Guelph must have been stuck in some sort of a real estate vacuum prior to this past year, keeping real estate prices suppressed compared to other areas of the city, but after the year we just had and likely proximity to the GTA, drawing in many out-of-town buyers, the lid to that capsule has clearly been torn right off and pressures are now starting to equalize.

  1. Sales to New Listing Ratio of 0.67.

There is absolutely no doubt in anyone’s mind that for the past 5 years Guelph has been in the midst of a seller’s market. Nowhere else was this more apparent than when homes were selling with multiple offers at the end of 2016 and the start of 2017 for tens, or even hundreds of thousands of dollars over their asking prices, even when they were being listed at a fair market value. Buyers were showing signs of extreme pandemonium in the midst of all of their competition, and sellers seemingly couldn’t lose.

Anyone can see that period in our lives was pretty much the ultimate example of a true “Seller’s Market”. In Q4 of 2016 the Sales to New Listing Ratio was literally 1.00 meaning for every 100 homes listed, 100 were sold. It didn’t really seem to matter the circumstances, buyers were simply lining up to purchase any piece of the Guelph-real-estate-market-pie they could get their hands on and, in turn, prices kept skyrocketing.

Now that the market has shifted and the buyer frenzies we once saw have almost all but vanished, the Sales to New Listing Ratio has dropped to a still-sizable 0.67, meaning we are in a much more balanced market (0.5 being perfectly balanced), but still weighted considerably towards the Sellers side. If this ratio were to be down around 0.2 or even 0.3 that would clearly indicate our market is in for a big price correction and heavily weighted in the buyer’s favour, but as of this moment Guelph home prices are still on the incline and properties are still selling.

All in all, yes, things did get a little crazy here in Guelph for a while, but in my humble opinion even though the Guelph real estate market has somewhat “slowed” since the spring, I still believe it is well-poised for future growth with one of the lowest vacancy rates in Ontario, the lowest unemployment rate in Canada and with a proximity of less than 100 km/1hr drive to Toronto and/or the GTA which, don’t forget, is the most heavily populated city in all of Canada and the 4th most heavily populated city in all of North America, I personally only see property values continuing to rise in Guelph’s foreseeable future.

Until next time, Happy Investing!