Some Insight on the Wellington County Market from your Broker of Record, Jeff Morley
As we begin 2023, worries over inflation, the economy and housing prevail across the county. In Wellington County we have seen every significant statistical markers decrease year over year. However, this doesn’t tell the whole story.
2022 started where 2021 left off. Scarce inventory, extremely low interest rates and motivated Buyers anxious to move due to the pandemic continued to dominate the market and the news. Work from home options became the norm for many and so the migration to smaller cities continued. These factors together pushed prices upwards to unprecedented levels.
Around March of 2022 the market started to reach a tipping point. Interest rates began to edge higher from record lows, buyer fatigue from a competitive market took over and continued lack of inventory exerted downward pressure on sales. As a result, Wellington County market activity dropped throughout the spring and summer.
Inflation hit a peak in August and continues to be a concern for the Bank of Canada and Canadians. As a result, the Bank of Canada has raised the overnight lending rate 7 times from 0.25% to today’s 4.25% overnight lending rate. The overnight lending rate affects short term loans like automobile financing and variable rate mortgages.
With an already cooling market these rate hikes have contributed to a further downward trend. Sales volume declined year over year in December by 17.31%, unit sales declined 12.8%, and the average price in Wellington County dropped 17.65%. At a glance these numbers seem alarming.
However, it’s important to note that prices increased from December 2020 to December 2021 by $24.99%. A net gain of 7.34% over two years if we include sales from 2021 and 2022. If we take a broader look, prices in Wellington County over the last 5 years have increased by 48%. This represents a massive increase in home values and equity, and is well above historic norms.
And while the financing landscape has dramatically changed over the last 10 months, it is important to note that mortgage rates have normalized. They are much more in line with historic ten-year averages today than the massively discounted prices we saw during the pandemic.
As such, Buyers seem to be making adjustments and regaining their footing. Furthermore, during the pandemic Canadians were saving more. Currently, people are still saving two to three times the normal rates seen pre-pandemic. Some will use these savings for down payments and with home prices moderating the real estate market is potentially more accessible to them.
We are fortunate to live where we do. Guelph, Wellington County and the Golden Horseshoe area are made up of diverse economies. For Guelph and Wellington County we are anchored with a strong manufacturing sector, while this area and the Golden Horseshoe have a strong information technology base.
We also have a large institutional sector with the University of Guelph and Conestoga College. These institutions offer jobs with stable employment and attract thousands of students to the area with substantial disposable income. This is further complimented by a strong government base with the Ministry of Agriculture, and a diverse agribusiness sector. All of this gives us low unemployment and most importantly economic stability.
As such, we attract immigrants with our good jobs and low unemployment. And with Canada accepting 465,000 immigrants to the country this year, these people will be attracted to the area, bringing with them good credentials, skills and the ability to find work. And ultimately they will look for housing.
While the economic picture is still healthy, a lack of housing and most importantly building is affecting the area. Inventory continues to affect pricing and in spite of the decrease in sale volume and unit sales a lack of listings is also helping to prop prices up.
Guelph and Wellington County continue to be attractive places to live.
With improving transit, a diverse and strong economy, low unemployment and great proximity to Toronto while still having plenty of green and recreational space, Guelph and Wellington County will continue to be a destination for many. Our real estate market is built on a strong foundation and the long term prospects for the housing market in Wellington County remain optimistic.
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