Investor buying in Guelph really slowed down after the big surge in home values back in 2017. At that time, house prices were rising, but rents really were pretty flat. For many investor Buyers, the math simply didn’t make sense.
Boy, things have changed.
Rents in Guelph have absolutely sky-rocketed in the last two years.
Graeme McNaughton, a Reporter with the Guelph Mercury Tribune, did some impressive sleuthing. Digging through Statistics Canada, he found data that indicates 1 in 5 Guelph homes being purchased is being bought by someone with no plans to owner-occupy. Investor buying in Guelph is clearly on the rise.
Asked to comment, I was intrigued. As Real Estate Agents, we don’t get this kind of data. There’s no way for us to tell if a Buyer plans to occupy a home we’re selling. Some Buyer agents include a letter from their clients or indicate they’re planning to take possession. But an increasing number of agents do not. And perhaps this is why.
Why is Investor Buying on the Rise?
With rents at such shockingly high rates, even with Guelph home prices soaring, investors can make sense of the numbers. When it comes to homes with accessory apartments – i.e. two rental income streams – market rents are so high that (even with a high price-tag) rental properties yield good cash flow.
For investors, this is good news. For a lot of Guelph residents, it’s not. Some worry that investors may leave these homes vacant. When homes sit unoccupied, it’s not good for property standards and it does nothing to increase rental supply. Others now feel completely squeezed out of the market, unable to compete with cash-rich investors.
We certainly know that investor buying is up. Ironically, investor selling also appears to be up. Current landlords in Guelph may be looking at record-breaking prices and deciding it’s time to cash in.
A quick look at homes for sale in Guelph as of this morning shows that, out of 51 properties for sale, 17 are tenant-occupied. Another 16 are vacant. Only 18 of the homes currently for sale in Guelph are solely owner-occupied.
Affordable Rents a Thing of the Past
I think what many current landlords have realized is that market rents in Guelph are through the roof. In many cases, the rents they’re charging are less than half of what people are prepared to pay these days. Well, some people.
Here’s the problem: Every one of those tenanted properties will likely sell to someone who won’t assume the tenants. Either the Buyer will be looking to live in the home, or it’ll be an investor. If the latter, they’ll want market rents.
We have an affordable housing crisis in this city, and it seems to be getting worse by the day. Unfortunately, illegal evictions seem to be commonplace. Someone buys a home, issues an eviction notice based upon their intent to own/occupy, while in reality they’re fixing the place up and re-renting it at a much higher rate. The tenants being evicted find out that their expenses are about to rise exponentially… that is if they can find a place to rent.
Guelph is a-changing. That much is for sure. Rising prices, a surge in investor buying and selling, rents out of reach for so many… something’s got to give, but no one seems to have any answers.
