Strong Sellers Market Making Home Buying in Guelph Challenging
Please find Hudson’s article below as featured on Guelph Today!
Market conditions mean buyers need to work closely with agents.
Buying a house may be the biggest investment people make. So, is it surprising then, with the uncertainty of 2020, the global pandemic has only had a positive impact on Guelph’s real estate market – especially for sellers.
What was already a strong market in 2019 was only amplified going through 2020. If early indications stay true, it may be even stronger in 2021 according to local real estate professional, Hudson Smith.
“I think many of the reasons we thought the market would slow down are the very reasons it got stronger,” said Hudson Smith, 16 year Guelph realtor.
According to Hudson, there are three primary reasons for the ongoing strength of the real estate market in Guelph and the surrounding area.
1) Historically low-interest rates
“Rates are at record lows,” said Smith. “There has never been a better time to borrow money. The low rates really help people in deciding what they can afford. You’re borrowing right now with many rates under two percent.” Smith said the low mortgage rates mean buyers hoping to get into the market are more comfortable taking on large mortgages at those rates.
2) A captive audience thanks to COVID-19
Hudson says he’s always believed that people make most of their major real estate decisions after spending lengthy periods of time at home, especially in the two weeks after Labour Day and the period marked by various holiday celebrations in December. “The reason for this is, people have spent time at home and have identified everything they want to change in their house or living environment,” he said. Given the realities of ongoing lockdowns and social distancing requirements caused by COVID-19, Hudson says real estate agents are dealing with clients who have nothing but time to focus on their real estate goals and changes they want to make about where and how they live.
“COVID has certainly given us a concentrated audience. People have been forced to spend more time than they may want at home. Also, no one’s leaving the house. Clients used to tell me they were flying to Mexico on vacation and would call me when they got back. That doesn’t happen anymore. They’re not even going out to dinner with friends.”
3) Flexible employment situations
In more and more businesses, employers are adjusting to the realities of COVID-19 and giving people the ability to work from home for both the short term, and in some cases, permanently. As a result, Smith says, “it’s given families, singles and couples the opportunity to get out of tighter urban centres and buy in more affordable areas, or just in areas that they feel are better suited for their lifestyle or to raise a family.” The simple fact is, people don’t have to stay as connected to where they work as they did prior to the arrival of COVID-19.
Although the effects of the pandemic have increased property value making it more of a seller’s market, it has created a very competitive environment for buyers The lack of supply has both buyers and real estate agents trying to make sense of where the market is headed in terms of prices. Compounding the issue in a market like Guelph is the fact more out-of-town buyers are targeting our city as the place they want to be.
“I think that Guelph was always considered an affordable option just down the highway a number of years ago,” said Hudson. “But then the secret got out that we weren’t just the next affordable city, we were an amazing community and a great place to raise your family. It seems everyone knows Guelph is just a wonderful place to live.”
Given the competitive realities of trying to buy a home in a strong seller’s market, Hudson has some advice for people hoping to buy locally or move to Guelph.
“Keep a list of your goals and try to stay objective. Too often we can get swept up in the competitiveness, and the ‘fear of missing out’ can lead to a bad decision. Think about it, in a market like this people often buy on a street that may be busier than they like, a single garage when they know they need a double or 1 less bedroom than they think they need, just because they feel the next house won’t be there. In short, they settle. Making an offer in a multiple offer scenario, the best decision you can make is on an offer where you are happy if you get the home, and happy if you lose it, too. This will always lead to good decisions that you feel secure about, and excited about moving forward.”
Navigating the real estate landscape Welcome to the first instalment of our monthly series dedicated to Baby Boomers and even some Gen X’ers navigating the real estate landscape and embracing lifestyle changes. In this series, we will delve into various aspects of the home-selling journey, offering valuable tips and insights specifically tailored to the unique needs of this demographic. The decision to sell your home as a baby boomer is often more than a transaction; it's a pivotal moment that marks a new chapter in your life. Whether you're an empty nester looking to downsize, seeking financial freedom, or simply ready for a change, this series aims to be your comprehensive guide. In this inaugural article, we'll explore why now might be the right time for baby boomers to sell their homes. From the emotional aspects of letting go to the practical considerations of market dynamics, we'll cover it all. Without further ado, let's dive into the first topic: Embracing Change – Why Now Might Be the Right Time for Baby Boomers and even some Gen X’ers to Sell Their Homes. As the winds of change sweep through the real estate landscape, many baby boomers are contemplating a significant life decision – selling their homes. While the emotional attachment to a home can be strong, there are compelling reasons why now might be the opportune moment for baby boomers to make this transition. Empty Nest Syndrome: The kids have flown the coop, and the once vibrant family home might feel a bit too spacious now. Downsizing can not only reduce maintenance costs but also provide a newfound sense of freedom and simplicity. Financial Freedom: With property values having likely risen considerably from the time you purchased your first home, selling and downsizing can provide a substantial financial windfall. If you are Gen X or Baby Boomer, this is a tremendous opportunity to bolster your retirement savings, embark on new adventures, or even assist your children with their own housing endeavours, while simultaneously simplifying your life. Maintenance and Upkeep: As homes age, the upkeep and maintenance demands can become more burdensome. Selling your home now could mean leaving behind the hassle of constant repairs and yard work, allowing you to enjoy a more relaxed and maintenance-free lifestyle. Shifting Market Dynamics: The real estate market is ever-changing, and keeping a close eye on current trends is essential. With high demand and low inventory in many regions, baby boomers may find themselves in a seller's market, potentially fetching an optimal price for their property. Even when the overall market has cooled, as it has over the past 18 months, there are always properties where it doesn’t matter what the market is doing, demand will always remain high with Sellers still fetching a premium for their homes. Lifestyle Changes: As Gen X or Baby Boomers entering a new phase of life, your lifestyle preferences may evolve. Selling the family home can open the door to new living arrangements that better align with current interests, whether that be a smaller residence, a retirement community, or even a travel-centric lifestyle. While the decision to sell a home is deeply personal, considering the current market conditions, lifestyle changes, and financial opportunities can help you make an informed choice. Embracing change and seizing the moment might just lead to a more fulfilling and comfortable future. If you feel you may be ready to embark on a new chapter, explore different living arrangements, or capitalize on the current market dynamics, or, you're a baby boomer that is contemplating the sale of your home, let's have a conversation. Together, we can explore your options, discuss market trends, and create a personalized strategy to maximize the value of your property. Contact me today to schedule a complimentary consultation. Let's turn the page and embark on this exciting journey together. Your next adventure awaits! Written by: Tom Hillson, Sales Representative
Purchasing a home in the current market In September there was a lot of talk on the return of the real estate summer slowdown. I addressed the concern and panic among some sellers in my newsletter, and how this shift is an integral part of the ever-evolving real estate landscape. This volume will focus on the advantages of being a purchaser in the current market. Healthy Market Stability: While the market's pace may have slowed down, it’s important to recognize that this is a sign of a healthy and balanced market. Buyers now have the opportunity to conduct thorough due diligence before finalizing a property purchase. Conditions like financing, inspections, and sale of property are back in play, allowing buyers to make informed decisions. Fixed Interest Rates: The topic of interest rates has recently experienced day-to-day fluctuations. With the Bank of Canada bond yields decreasing this week, we anticipate a continued reduction in fixed mortgage rates. It's important to note that bond yields and fixed mortgage rates have a direct connection. Meaning when bond yields lower, fixed interest rates decrease. Although lenders have begun to reduce their fixed rates, the decrease is not as significant as the fall in bond yields. Current rates for an insurable 5-year fixed are 5.75%. Lenders rates tend to take the elevator on the way up and the stairs on the way down. Overall this is excellent news for anyone with a mortgage renewal approaching in the near future.
Real estate in Guelph I am not going to pretend I know what is going to happen, but with so many people asking me, it’s only fair I try. I mean, I have my opinions, and I will continue to make my personal decisions when it comes to real estate and investing based on them – and when my clients ask, I will share how I feel. So, how do I feel about the real estate market? Well, actually pretty good. And how did I feel last month? Well, pretty good. What about a month from now? Yes, pretty darn good. How can you feel good about something that so many are feeling bad about? Well, I am not quite sure that the owning of real estate, or the homes people want, or the investments they hope to make have people feeling bad; I imagine it is more about the new interest rates. Let’s look at the investment of real estate first. Whether you are renting it out or living in it, it is a choice of what to do with your money. For the people that are living in it, it’s great to know that it is an investment, because you have to spend money on housing regardless. When we look at any investment we always ask ourselves, “Does this make sense?” The simplest way I can look at real estate and answer that question is to say, I have a product and the people that want and need this product are growing, and the availability of this product does not seem to be doing the same. Describing it this way helps make the most sense to me. I guess I could say the same thing about Coca Cola, but there is Pepsi, Sprite, water, beer, and this Prime drink that my kids won’t stop talking about (don’t get me started). So real estate as an investment makes sense, as there is no alternative to housing. What about everything I am reading about prices going down? Well, real estate prices are going down now, since the rates people use to afford them have gone up. When the rates go down, you know the prices will start to climb again. The market is very healthy – I have been saying this for months. The reason we’ve noticed some homes not selling is due to the sellers adjusting their price expectations downwards slower than the buyers are. The sellers are still willing to accept the price of a spring ago, but the buyers are the ones calculating the interest rate. When rates go up that quickly, it’s hard for sellers to accept things fast enough, so buyers wait, and one by one new sales prices give data to sellers that say “You see, these are the new prices,” and a reluctant decision takes place by way of a price adjustment and then another sale happens. In the spring market of 2022 prices rose but when interest rates started to climb prices fell. Although real estate goals still existed, and people still wanted to invest, the falling prices is what grabbed the headlines, so that healthy underbelly lies just below the surface. Now here we are, in the early part of the year and what can sometimes be the barometer of how our real estate market will perform. How is it going? Well, the supply and demand levels have once again tipped in a slight favour of the seller, but buyers armed with a different interest rate are taking a more calculated approach instead of having a fear of missing out. To conclude, a properly priced home will sell, an underpriced one will sell for over asking, and an overpriced home won’t sell at all. You see, nothing to see here, just a regular old spring market in Guelph. Thanks for reading, and I thought this quote would be fitting. “When the market is greedy, I get scared. When the market is scared, I get greedy.” -Warren Buffet
