171. The Hidden Numbers Affecting the Guelph Real Estate Market | Guelph Weekly Sales Summary
September 13th, 2019 Sales Summary:
THE HIDDEN NUMBERS AFFECTING THE GUELPH REAL ESTATE MARKET
Record setting price levels don’t seem to be discouraging buyers in the Guelph real estate market from stepping up to the offer table. A 13% increase in the number of homes sold this past week over the same period in 2018 helps to substantiate that claim.
52 homes were reported sold this past week, compared to 46 the previous year. The median price last year was reported as $481,250 and this week we are showing the median selling price in Guelph (including the townships) as $535,500 an 11.27% increase year over year. Our median price has now surpassed the median price at the previous peak in 2017.
What’s driving the Guelph market when other areas such as the GTA have been dealing with decreasing prices and activity over the past year?
We looked at the number of listings that have been coming into the Guelph market over the past 10 years. We have averaged 236 new listings entering the MLS® system in Guelph each month. The Orange line in the chart reports the number of sales each month for the same time period, with the average being 187 homes per month. You would think that with an excess of 49 homes per month going unsold that inventory levels would be building significantly. That’s not the case and that’s one of the reasons the median price in the Guelph real estate market continues to outpace the provincial and national numbers.
We looked at the listing data over the past 45 days in the city of Guelph. We wanted to see what has been listed, sold (conditionally and firm) and listings that were cancelled over the same 45 day period. 97 listings were cancelled over that time period. Of those cancelled listings 68 of them were quick re-listed and back on the market, which also meant they were counted as a new listing again. The picture quick resolves that up to 10% and possibly more of the “new” listing inventory each month is in fact a re-list and is being double counted.
That means that the cushion of inventory doesn’t build at quite the level we expect if we look at the chart. This distortion is magnified in some price points and neighourhoods particularly in the condo and over $800K price points. The higher numbers of new listings would indicate plenty of inventory coming into the market place when in fact a significant portion is being recycled. We recently saw one agent boast on his sign the property just sold over list and in under a week, when in fact it had been over 60 days on the market and the price had been significantly dropped. When it was cancelled and re-listed at the new price it did indeed sell quickly, got multiple offers, and did sell higher than the new list price. I think you get the picture on how the median and average numbers can now be distorted.
So what does this have to do with our escalating prices? Historically, inventory levels have and continue to be tight in our market. When you look at the months of inventory chart for our regional market you quickly see that Cambridge and KW all seemed to maintain higher inventory levels than Guelph.
It’s only been in the last 2 years that those other markets have converged to the Guelph level. At the end of the day, low inventory levels translate into higher sales prices due to the lack of available homes to look at.
Couple already low inventory levels with significant growth in the local population and builders not building as many detached homes as before, and you can see how the level of demand keeps favouring sellers. We don’t expect this to change significantly for the foreseeable future.
Good news if you are a seller - especially the baby boom generation that is starting to sell and downsize. As a buyer you are still going to be challenged to find a “deal”. Your best opportunity lies in being well prepared to enter the market by having all your ducks in a row. Our team at HGR knows how to best prepare you to jump into this market. Call us for a consultation. It could make your real estate journey a much better experience.
This week’s sales report:
52 Homes sold, 13% increase over 2018.
19 or 36.5% of the homes sold went at or above list price.
The median sold home looked like this:
3 bedrooms, 2 baths, 1403 sqft.
Sold for $535,500 or $384.20/sqft
Days on Market: 19
Sales Price/List Price Ratio: 98.89%
The Guelph Jazz Festival is on this weekend. Home Group Realty is proudly sponsoring this event. The festival features a ton of great talent - amateur and professional. Check out the free concerts Saturday at the Market Square Stage, you won’t be disappointed!
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