Issue 167 | Guelph Weekly Sales Summary
August 16th, 2019 Sales Summary:
Storm Clouds Brewing?
There’s been a story building in the media over the past few weeks. You might have heard all the talk about an inverted yield curve, scratched your head and wondered what it could possibly mean to us if we don’t buy bonds. Here’s a good article from the New York Times that puts it into a sports analogy, and why it might be important to you.
We’ve all enjoyed the benefits of low interest rates over the past almost 10 years. The downside of this is that the central banks and governments have little room left to provide stimulus to our economy if there is a recession.
Economies run on confidence. There’s not a huge amount of confidence in the world right now that the global economy is going to continue to grow. The US/China trade war, the German economy, the third largest exporter on the planet, has contracted for the second quarter out of the past four all point to what the experts have been whispering about. A likely recession in the near future. The inverted yield curve means the interest being offered/paid is higher on short term money over long term lending. Investors typically will want a higher return on a longer term because risk is higher. When the curve inverts it generally means less confidence in the short term economy. Hint, an inverted yield curve has foreshadowed every recession in the past 50 years.
What’s that mean for us here in Guelph?
Historically we have usually weathered rough economic times relatively well. I say relative because we have a well diversified economy and are not reliant on one industry. University towns such as ours tend to not feel the effects as much. That’s not saying we don’t feel any of the pain.
I’m not sure what to make of all that is going on. Part of me is worried a little more because the proliferation of information and the 24 hour news cycle tends to put out screaming headlines and not a lot of substance. To me that’s a recipe for overreacting.
So again, what does this mean for the average homeowner in our real estate market?
If things continue to slow down globally, eventually it will reach here. As a nation that exports most of what it produces, a global slow down will mean jobs put at risk and consumer spending is reigned in. In the past it means buyers tend to step back and make sure they are secure job wise and income wise before the buy. It also means banks get even more restrictive about lending and finally it means inventory levels build as houses start taking longer and longer to sell. The end result is a softening of the local real estate market. House take longer to sell, prices drop, I think you see the picture.
Now I get to sound like the grizzled vetern of 30 years. There was a time not too long ago that homes on average were taking 90 plus days to sell. Compared to less than 3 weeks in today’s market, if those days return that will be an eternity to this generation of sellers. Buyers may finally feel a little relieved, for the short term.
I for one am not worried about the Guelph real estate market. I’ve seen price drops and significant increases and over the long term a nice 6% annual growth rate. I’ll take that any day! Yes there may be storm clouds gathering in the global and local real estate markets and it’s nothing we can’t prepare for and survive.
We are going to continue to advise our clients to manage and control what they can. Clear short term and “bad” debt. Start building up some cash reserves to weather any rough patches. Make sure they have maintenance up to date on their homes. Too often in the past I’ve seen clients forced to sell their home because they didn’t have the savings level to maintain their homes even for a short time if they were out of work.
For a lot of buyers and even sellers, a downturn in the economy spells opportunity.
You and I may not be able to control the tweet storms and the puffing amongst the big world economies, but if we have our own house in order and have a solid financial foundation under our feet we can weather any storm that hits.
To end on a positive note. Next week is the 22nd annual Ribfest in Guelph. The Rotary Club of Guelph-Trillium, of which I’m a member, puts on this great festival. It wouldn’t happen without the strong support of our local business and leaders. A huge shout-out to Sleeman Breweries, Linamar, RBC and Guelph Manufacturing to name just a few of the top sponsors. These companies and their teams show their support in our community by sponsoring our event and many others events in Guelph. Thank you! And thank you to all of you that come out to Ribfest and enjoy the food and entertainment. You win with a great festival and the community wins because this event funds dozens of local charities each year.
The week in review:
Sales were up this past week by 37% over the same week in 2018.
Sixty-three homes sold in Guelph, Guelph-Eramosa and Puslinch Townships.
21 or 33.3% of the 63 homes sold went at or above list price this past week. That’s on par with last year’s results when 14 out of 46 homes sold at or above list. You can view the report for August 17, 2018 here.
The median home in Guelph and area for the past week looked like this:
3 bedrooms, 2 baths, 1354 square feet. The median sales price was $510,000 or $359.76/sqft.
It took 18 days for the median home to sell and Seller’s were able to negotiate 98.94% of their original list price. View the full report for August 16, 2019 here.
The Guelph real estate market is still in a strong seller’s market despite all the turmoil in the world’s major economies.
Enjoy the weekend.
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