Guelph, Ontario 2021 Market Outlook
Real estate outlook for 2021
April sales hit the biggest year-over-year rise since December 2017 thus Canadian housing market seems to be on the bounce back.
But that doesn’t necessarily mean properties are becoming more affordable. A five-year forecast on Canadian home prices has stated that costs will increase across the country in all but two cities. “With the direct and indirect effects of monetary tightening, house price increase will slow down in 2020, turn briefly negative in 2021, and only recover in the following years,” Andres Carbacho-Burgos wrote in the report. The forecast was conducted by Moody’s Analytics using RPS Real Property Solutions data. It predicts that Canadian home prices will increase by 2.2 per cent between Q1 2019 and Q1 2024. St. John’s and Guelph will see the biggest jump in prices, climbing 6.1 and 5.5 per cent, respectively. As compared to Guelph, Barrie (5.2 per cent), Edmonton (4.2 per cent), and Toronto (3.3 per cent) will round out the top five cities with the highest increases.
Price is rising or stable outlook:
Guelph Real Estate market saw unrivalled growth in volume and prices. The median sale price of a property in Guelph in April, 2018 was $470,000. Compare this with a median sale price of $486,000 in April of this year. That is nearly a 4% growth in that 12 month period.
Market growth and stability
It has been almost 2 years since the Guelph Real Estate market saw unrivalled growth in volume and prices. While we aren’t seeing the historical numbers that 2017 brought, the Guelph housing market is still growing. The median sale price of a property in Guelph in April, 2018 was $470,000. Compare this with a median sale price of $486,000 in April of this year. That is nearly a 4% growth in that 12 month period. This is a much more manageable pace to maintain than the hyperinflation of 2017, especially if you are a buyer.
Continuing the trend of 2018, 2019 has, and is expected to continue to provide a healthy balance of supply and demand in the housing market. The supply is continuing its climb toward the historical average after plummeting by nearly 50% to a historical low in 2017. In addition, the average days on market have been consistent around the 14-16 day mark for over a year now. These are signs of a healthy market for both buyers and sellers.
Increase or decrease in market demand:
Guelph has shown rapid increasing trend for 2017. This trend is seemed to be balanced in 2020.
Real estate market growth:
An interesting point to note with current market conditions is there has not been a decline in sale prices in the last 12 months, something that typically follows an economic spike such as 2017. The volume of sales has certainly decreased since the spring of 2017, but has surprisingly leveled off in the last 12 months, to the delight of many. This would suggest that we may be able to avoid, or at the very least weather, a potential recession that we all hear is on the horizon.
As a seller, it will be more difficult to price your home to sell in this climate. Trusting basic economic principles, an increase in supply with consistent demand should lead to lower growth rates. While we are not likely to see a decrease in sale prices over the next year, it is more likely growth rates will continue to level off around 4% as they have over the last 18 months. That being said, a strong marketing plan and a competitive list price will ensure your home moves quickly.
As a buyer, you should feel more comfortable entering the market under these conditions. While interest rates have risen very slightly since April 2018, the Bank of Canada is expected to maintain the overnight rate at 1.75% for the remainder of the year before an expected increase in 2020. As of April, 2019, the Bank of Canada maintains that it is in “no rush to get back on the saddle in terms of hikes”. This should be comforting to buyers knowing that the market is entering a mature phase of the cycle and supply will hopefully continue to catch up to demand.
From an investment standpoint, the recent price increase in apartments and townhomes will likely price out some buyers and should increase demand in the rental market. If you are able to lock in a rate before the end of the year, it may help your net cash flows for 2020 and beyond if the expected rate increase comes to fruition.