Blog Issue No. 159
Guest Blog: Are Guelph Average Home Prices Just Fake News?
Why digging a little deeper may get you a lot further when jumping into the Guelph real estate market
Have you read the latest news about the Guelph housing market? Reports relating to sales activity in May reveal that the housing market in Guelph and Toronto are showing an increase in the average price for residential real estate.
Average prices in the City of Guelph hit 5-year highs for the period of January-May, over $520,000, or an almost 5% increase over the same period in 2018. But is this something homeowners across Guelph should be celebrating, or is this new high a warning sign of something beneath the surface?
What you should know about “average price” and real estate
One of the most common metrics used to measure real estate is the average price. It’s a term loosely thrown around each month to get a quick sound bite of how your local market may be performing. However, there are so many different variables that play into average price increases or decreases that you should be wary of this number as the sole measure of market health.
In retail business, the term “same-store sales” is used to compare stores that have been around more than a year while eliminating new and closed stores, or “noise” that may artificially impact sales data for a specific timeframe. It’s a way to compare apples to apples and understand whether a core market is strong.
With this mind, here’s a basic example of how the average home price can be a skewed measure of housing market performance:
100 homes that sold in Guelph
50 were existing homes with an average price of $500,000
50 of those were a brand-new development of entry-level townhomes selling at $350,000
2018 average price is: $425,000
100 homes sell in Guelph
50 were existing homes that still averaged a price of $500,000
50 were a new high-end condo development that sold for $600,000
2019 average price is $550,000
Although the number of existing homes didn’t change at all, if reported on, this data would make it appear as if there was a 29% increase in average price.
Neighbourhoods also impact averages
Just because the entire Guelph market is increasing, it doesn’t mean all things are equal across the city. Often times, buyers of downtown homes are not necessarily the same buyers of Westminster Woods homes or Victoria North homes for a variety of reasons. Yet, these neighbourhoods are typically grouped together in a “City of Guelph” number as a market performance indicator. Neighbourhood dynamics create a unique market, including people that are interested in buying or selling in a specific area.
Here’s a look at how individual neighbourhoods are performing this year, based on the percentage change versus 2018, ranked from highest increase to lowest:
St Patrick’s Ward (the Ward) +33%
Onward Willow +11.5%
General Hospital +11.3%
Dovercliffe/ Old University +10.5%
Willow West/ Sugarbush +10.4%
Victoria North +6.4%
Grange Rd +2.7%
Exhibition Park +2.4%
Pineridge/ Westminster +1.9%
Kortright West +1.7%
Kortright Hills -0.8%
Riverside Park -1.9%
Village by the Arboretum -4.9%
St Georges -6.1%
Kortright East -8.4%
Other factors outside of an existing home that could impact averages are new or closing retail businesses in an area, schools, road closures and more.
The takeaway from all of this? When researching real estate, go deeper than the common news headline or report on averages. Each individual homeowner or buyer should consider more detailed trends in specific markets to ensure that they’re making the most informed decision available. Your Realtor® should have this information available for you when asked.
Source: GDAR data, 2018-2019. Excludes areas with less than 10 sales per year.
This week in the Guelph real estate market.
In a word, WOW!
70 homes were reported sold this past week in Guelph, Guelph-Eramosa and Puslinch Townships. That is a 52% increase over the same week last year!
Much like Beth and Ryan explained in the post above. At HGR we use median values rather than averages when describing what is happening in our local real estate market.
The median home this past week in the Guelph real estate market looked like the following:
This home was 3 bedrooms, 2 baths and was 1427 square feet in size. That home had a median sales price of $538,500 or $373.82 per square foot and took 15 days sell. Sellers were getting 98.56% of their original list price.
This is comparable to the same week in June 2018 where the median home sold was 1441 square feet, sold for $513,750 and took 16 days to sell. Home sellers then were getting 98.42% of their original list price.
Conditions remain strong for sellers in our market with 23 of the 70 homes sold this past week selling at or above list price. While conditions remain strong, be sure to take a deeper dive into the neighbourhoods you are interested it as suggested by Beth and Ryan in this week’s post. Subscribe below to get access to weekly sales for all of Guelph's neighbourhoods.
Enjoy the weekend,
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