Are The Winds of Change Blowing?
The winds of change have been blowing in the real estate market this spring, but as we head into the summer season, does that mean Guelph-area buyers and sellers need to be concerned?
The short answer is, probably not.
While every market has its challenges – and the ones the Greater Toronto Area has been facing tend to loom large – living in the shadow of the GTA’s super-heated housing market and government attempts to quell it have created little of a ripple effect here.
In fact, Guelph recently topped the list of Canada’s cities in which to buy real estate, according to an annual ranking by MoneySense.
Looking at factors such as affordability, income potential, sustained price growth, a strong economy and low unemployment levels, Guelph has one of the country’s healthiest real estate markets, the ranking found.
That bodes well as speculation increases that our prolonged and historically low-interest rates will soon be on the rise. For home buyers already feeling the sting of tighter mortgage regulations introduced last year, a steady market with healthy growth is a much easier one to enter or move up in.
And for those worried about a market crash, the “housing bubble” is not likely to burst that dramatically here. Thanks to a decade of steady property appreciation, many homeowners have built up a healthy home equity that could withstand even a 20% drop in value. Yes, that depreciated value would sting, but it’s not likely to mean losing your nest egg.
Market activity is expected to be lower overall this year than last, but with less than a 3% decline predicted, the effect will be minimal. Prices in the Golden Horseshoe are not expected to drop, thanks in large part to a continued low supply of homes for sale. Sales through the spring, for instance, stayed steady at close to 400 units a month, which is well above the 10-year average of about 225, while prices hover about 25% higher than they were a year ago, despite government measures introduced in April to cool the regions’ soaring housing prices.
It is still very much a sellers’ market as the number of listings available (the supply) is at least 20% less than the same time last year. But if the changes in mortgage regulations, combined with potential interest rate increases, start to affect demand, sellers may need to adjust to a slightly slower market.
And for those not in the market to buy or sell, it’s a good idea to check your mortgage terms. With interest rates set to rise, locking in a variable-rate mortgage might be the way to go.