No one really has a crystal ball to divine the future of real estate, but some of my late-fall predictions are already coming true so… here are my thoughts on how the market is likely to unfold in Guelph this year:
The Rental Property Market is Back
Last January and February, the parent-investor and general-investor purchaser of university student housing was hard to find, to say the least. After the incredible equity gains for homes in Guelph in 2017 (particularly in the south end,) the numbers were a challenge. Finding a home to rent out and that would be cash-flow positive was quite a challenge. Few pulled it off.
Part of the reason was that Sellers in early 2018 were stuck in a moment in time – a crazy moment in 2017 with wild equity gains. But the market was experiencing a correction, and Buyers also had new mortgage rules to contend with… rules that reduced purchasing power.
All in all, we’re seeing homes priced more accurately, and Buyers have also adjusted to the new mortgage rules. Rents have not risen sharply, but at least a cash-flow-neutral position is easier to find.
The Spring Rush is Coming
Remember the annual wild post-March break Buyer rush in 2018? No, me either… because it never materialized. We had a long, cold winter, and a rather horribly-timed wind storm that took the wind out of the Spring rush sails.
On top of that, the market was in the midst of a correction from the 2017 madness. All in all, the rush was more like a trickle.
It was an odd year – I was literally busier in late November than I was in March… it made no sense. But, it led me to believe that this year, the Spring rush is making a return. Expect a spate of inventory to hit the market right after March break… unless the Gods of Wind & Ice deliver us another blow. But, surely not.
Affordable and Luxury Homes are a Sweet Spot
What we call “affordable” in Guelph is, let’s face it, not really that at all. But an entry-level point for at least a detached home in Guelph hovers around the $500,000 mark. Across the board, the median price for a detached home in Guelph is actually over $560,000 – as of the end of 2018.
Home priced in that high-400s to under-600 range are moving quickly and we will see a return to competitive Buyer scenarios in this price point.
In the luxury market, call it $900,000 and over (in general terms,) again we see good movement and that’s a nice indicator of a healthy market.
The tough spot? That mid/upper range of homes – mostly detached, and in the $650,000 to $850,000 range. Buyers here are discriminating. These are not first homes, so Buyers are more savvy – and a lot more picky about what they’ll compromise on (or not.)
Marketing these middle-upper homes for sale is critical. The homes do not “sell themselves” and competition is fierce. Proper listing preparation, marketing and pricing strategies, and exposure are key.
In short: entry-level housing is on fire, luxury homes aren’t lingering, and everything in-between is a tougher sell.
Buyers are Thinking Regionally
It’s not a big surprise to those who follow market trends that TrilliumWest launched a Kitchener office in late fall of 2018. Why? Because we’re needed there.
Buyers coming from all over the place are looking at the Guelph area now. Kitchener, Cambridge, Fergus… it’s all on the table now. Buyers are coming and going in-between these cities, too. I sure spent a lot of time helping people buy homes in Fergus last year, when they started to look at just how far their dollars go there vs. here in the Royal City. The same can be said for Kitchener and Cambridge.
All of these are hot markets, and our reality as people living and working here is that a 20-minute drive is kind of just the way it is. Guelph, for example, is now so busy and our infrastructure so insufficient, that a drive for me downtown to the south end of Guelph can easily be the same amount of time it takes me to get to Fergus.
As Fergus’ amenities have grown, we’ve also watched the revitalization of downtown Kitchener. Those of us who might have once said, “Kitchener… really?” We’re now saying, “Kitchener… really… it’s on the rise in every way imaginable – and it’s a smart place to invest.”
So – those are a few of my predictions. We’re off and running in a bustling 2019 market, so time will tell and soon enough.