This article was originally published on GuelphToday on February 18th 2020. Beth and Ryan Waller have been the real estate writers for GuelphToday since June 2018.
Buyers are frustrated.
Sellers cashing in.
These echo the sentiments of the Guelph real estate news headlines in 2017. So far in 2020, we’re almost on an identical path.
Sellers, you may want to keep reading.
In January 2017, the months of inventory (MOI) was bouncing around the one-month level. This means, that at current sales trends, it would take one month to completely sell through every house in Guelph.
For some perspective, to have a balanced market you would need roughly four-months’ supply.
Fast forward to January 2020 where supply is slightly greater than 2017 and interest rates continue to be low while the local economy continues to be strong. Dangerously low inventory levels are resulting in a major supply and demand imbalance. Too few homes for sale, not enough sellers and line ups of buyers results in increased home prices.
Situations like this are risky.
Buyers are often getting involved in bidding wars and paying more money than they had anticipated
Buyers are often getting involved in bidding wars and paying more money than they had anticipated, or have been pre-approved for, or what the house is even currently worth. Because the market is so competitive, buyer’s conditions (such as financing, having a home inspection or condition on the sale of their own property) are often dropped. Not because they want to, but because to be competitive they need to make their offer as appealing as possible in a low inventory market. On the other hand, sellers are requesting larger deposits to ensure that the buyers of their homes are serious. However, even then a larger deposit doesn’t necessarily mean the buyer will qualify for the mortgage when the home goes to close.
How does this happen?
This isn’t just baby boomers though.
Many Guelphites who are contemplating a move within the city, whether upsizing or downsizing, are waiting for the right home to buy before selling. With limited supply, they aren’t in any rush to move and are holding out to buy the right house at the right price under the right conditions.
Buyers from the GTA continue to move west down the 401 in an attempt to “down price” and pocket some money by selling there and buying in Guelph. In January 2020 alone, over one-third of total buyers in Guelph was represented by a brokerage outside of Guelph, indicating a likelihood of a buyer from outside of town.
Are you a buyer or seller in this market?
If you’re selling in this market, you’re in control at the moment with almost two-thirds of houses selling at or above the asking price in January. However, to get the best results, you’ll need to consult with your REALTOR®. Be sure to ask them their pricing strategy for your specific neighbourhood as not all areas perform the same, along with their marketing plan to attract the largest audience of buyers for your home.
If you’re buying in this market, you’ll need patience, preparation and a savvy REALTOR®. It’s best to understand what comparable properties have sold for and be firm, yet aggressive with your offers. Ask your REALTOR® to share neighbourhood growth trends to get an idea of what a home could potentially be worth in coming years in that area or if you may be considering a home in a more sluggish area.