As Christmas decorations hit the shelves and holiday parties start, many people consider whether or not the cold winter months are the right time to buy and sell Guelph real estate.
Is there a right answer?
Traditionally, the Guelph real estate market sees a slight uptick in the number of sales in October, which could be due to children now in school and people wanting to settle into their new homes before Christmas. And sales in October 2019 were no exception: it was one of the strongest Octobers on record with almost 200 homes changing hands.
Interestingly, Guelph has returned to a strong seller’s market with inventories decreasing and 34% of home sales selling over the asking price in October. Couple that with 31% of homes selling over asking in September and we have our most aggressive back to back months of the year.
Is this the last hurrah before the winter months kick in? We’re not so sure.
With 10 months of 2019 behind us Guelph real estate continues to outperform expectations – more houses have changed hands in 2019 than last year. Average prices are increasing to new record highs across the city and rental prices are climbing due to lack of options and greater desire. If you’re a seller, you’re celebrating your investment. But if you’re a buyer, you’re probably getting frustrated right about now.
Winter months are supposed to bring a slowdown to the market, a welcome reprieve for buyers. People are busier and let’s face it, have better things to do that be trudging through the snow to see a house. There’s supposed to be less buyer competition in the market. But the challenge, especially coming out of an aggressive September and October, is that even more buyers who lost out on bidding wars in September and October are attempting to buy up the lower inventory on the market. This is a recipe for even higher selling prices.
Real estate listings as of November 14th show only one single-detached home available for sale in Guelph $400,000 or less.
In November 2018, there were 9 sales and in November 2017 there were 13. The price bracket between $450,000- $550,000 is by far the most aggressive price range in Guelph right now and as a result, it is driving average prices up.
This increase in average purchase price puts pressure on first-time homebuyers even with access to Canada’s First-Time Home Buyer Incentive (FTHBI) – 5% toward the down payment of a resale home, or up to 10% toward the down payment for newly built homes.
FTHBI is limited to households with combined earnings of less than $120,000 and has an available mortgage amount capped at 4x the household income. This means the incentive can only be applied to a maximum mortgage of $480,000 plus the required 5% down payment. In other words, after total household income is considered, the maximum price of the home cannot exceed $505,000 for first-time homebuyers to qualify for the incentive.
Finding something suitable for first-time homebuyers in Guelph may be difficult.
So, what’s going to happen in the winter months of the Guelph real estate market?
If we knew, we’d be considered geniuses. But based on the data and trends we see, it’s estimated that the winter months of December, January and February 2020 will result in more aggressive behaviour, higher average prices and continued lower inventory than prior years.
We anticipate a larger percentage of GTA purchasers into Guelph, looking to “down price and downsize” their homes into a relatively smaller, more affordable market. With Canada maintaining it’s overnight interest rates at 1.75%, it’s quite likely that mortgage payments will remain stable through the winter months and into summer 2020.
Timing the Guelph housing market is not easy. There are so many market dynamics that play into the decision to buy or sell a home. Whether you’re buying or selling, you should get the relevant facts from your Realtor®.