According to statistics recently released by The Canadian Real Estate Association (CREA), national home sales were up in February 2017. While February sales were up from the previous month in about 70% of all local markets in Canada, the national increase was overwhelmingly driven by the Greater Toronto Area (GTA) causing a Guelph home shortage. “In and around Toronto, many potential move-up buyers find themselves outbid in multiple-offer situations amid a short supply of listings,” said Gregory Klump, CREA’s Chief Economist. “As a result, they aren’t putting their current home on the market. It’s something of a vicious circle from the standpoint of a supply shortage and a challenge for first-time and move-up home buyers alike. By contrast, housing markets in urban markets elsewhere in Canada are either balanced or are amply supplied. Because housing market conditions vary by region, further tightening of mortgage regulations aimed at cooling the housing market in one region may destabilize it elsewhere.” The number of newly listed homes rose 4.8% in February 2017, led by the GTA and nearby markets following a sharp drop in January.
Months of Inventory
The number of months of inventory is another important measure of the balance between housing supply and demand. It represents how long it would take to completely liquidate current inventories at the current rate of sales activity. There were 4.2 months of inventory on a national basis at the end of February 2017, down from 4.5 months in January and the lowest level for this measure in almost a decade. The imbalance between limited housing supply and robust demand in Ontario’s Greater Golden Horseshoe region is without precedent (the region includes the GTA, Hamilton-Burlington, Oakville-Milton, Guelph, Kitchener-Waterloo, Cambridge, Brantford, the Niagara Region, Barrie and nearby cottage country). The number of months of inventory in February 2017 stood below one month in the GTA, Hamilton-Burlington, Oakville-Milton, Kitchener-Waterloo, Cambridge, Brantford, Guelph, Barrie & District and the Kawartha Lakes region.
This shortage of Guelph homes for sale has buyers lining up to bid on the homes that are hitting the market. When a home sells, only one buyer is removed from the pool of buyers in that price range. The remaining buyers move on to compete for the next similar home that becomes available. This activity is putting unprecedented pressure on home prices as frustrated buyers offer more and more until they’re successful. Many Guelph homes, as a result, are selling well over asking price.
Guelph and area home buyers are well advised to base their offers not on the asking price of a property but what amount they feel comfortable paying. Researching what similar properties are selling for is always a good idea. Selling prices seem to increase based on how many offers there are for a certain property. If there are only two or three, prices offered may be relatively close to asking. If there are six, ten or even more offers, chances are that at least one of those buyers will make a big offer.
Spring market conditions should continue until the end of June when the market usually cools slightly for the summer months. However, buyers who were unsuccessful in purchasing in April, May and June may keep the market cooking for the foreseeable future.
Multiple offer scenarios or “bidding wars” are becoming common in Guelph’s hot real estate market. Here are 10 proven strategies that will help to get your next offer accepted or 10 ways to win a bidding war.
