It’s a new year and, in the Guelph real estate market… it’s off to a very fast-paced start.
In past years, January signaled the beginning of the investor-buyer market. Because most student rentals run on a May-to-May lease basis, investors and parent buyers hit the ground running early in the year. Some years, by the second week of January, it seemed like the wild wild west in terms of south-end inventory. This was especially the case in Guelph neighbourhoods with a high density of student rental properties.
Then, 2017 happened. We had a huge amount of in-migration from GTA buyers, and prices rose dramatically. What a year. People were paying what many of us “Guelphies” considered to be ludicrously-high prices. For them, it was all relative. Our “overpriced” homes were a fraction of what they were used to in the GTA. Competitive offers with no conditions were also routine for them. Local buyers were at a disadvantage, and it was a challenging time to be an ethical Buyer’s Agent. Being responsible and encouraging due diligence with matters like financing and home inspection essentially meant… your client was probably going to lose. It was grim, frankly.
A Flat Rental Market in 2018 and 2019
For years, I spent the majority of my time in January and February working with investor buyers and sellers. In 2018… nothing. Home prices in Guelph had risen so high that the math really no longer made sense for investors. Landlords who were used to covering expenses and also having a nest-egg left over each month struggled with our new reality: rental properties are more or less a break-even proposition, in most cases. Projected equity gains, not monthly cash flow, was the new math we focused on. It was a bitter pill for many investors to swallow.
Other factors played into the decline of the rental market buyer, including tougher mortgage qualification rules that often lowered purchasing power, and the fact that market rents – at least then – were not going up considerably in Guelph. So the buy-in was higher, but the rents were close to the pre-2017 levels. Not especially attractive to investors, then.
2019 was the same, at least for me. The rental market in those first few months was virtually non-existent.
2020: The Rental Market is Rebounding
Fast forward to this year, which is off to a very fast pace. We don’t have a good inventory of rental properties for sale, but the ones coming on market are going very fast, and virtually all of them in competition. Cash offers, i.e. no conditions and no due diligence, are back in play and it generally gives that sense of… deja vu all over again, as the saying goes.
Also worth mentioning is what seems to be a steep rise in Guelph rents. As tenants leave, landlords are re-evaluating rents, in some cases updating homes to yield higher rents. It makes the math work better for the investor and landlord, but you don’t have to look far and wide to see how many people in Guelph are struggling to find a rental that they can afford.
Something tells me it’s going to be an interesting year for the Guelph real estate market. Myself, I don’t long for a return to the wild wild west of 2017, but I have predicted on a number of occasions that I thought another year like that was inevitable. Will it be 2020? Time will tell. But as of the moment, I’d say leading indicators suggest that – at least in the entry-level to mid-level price points for homes – it’s shaping up to be a seller’s market in Guelph for 2020.
