Local Real Estate Holding Steady

Guest Columnist: Chris Bisson, Partner, The Mortgage Centre

Many of my past clients are left wondering about what is happening to the value of their real estate given all the negative news they hear about the state of real estate and the economy in the United States. The value of real estate is impacted by a number of things. Here are a few that I think should be top of mind considerations for people living in Guelph and the surrounding area:

Jobs: Guelph is a job creation machine. Despite the fact that some large manufacturers closed their doors last year, our city has maintained a solid job growth rate as reported by Statistics Canada (chart). A large part of Guelph’s strength and stable real estate prices is due in large part to its diverse economy.

Land Development: While jobs are solid drivers for price growth, land development can be a driver and a killer to prices. The City of Guelph is attempting to purchase the property known as the York District Lands. This is essentially the area bordered by York, Victoria and Stone roads, and Watson Parkway. The City’s goal is to develop the lands as employment lands to fulfill a strategic objective of having 5 years worth of employment lands available to sell to businesses. With the development of these lands will come jobs and more demand for housing, which helps prices. The flip side of that is for the residential properties nearby whose prices might be negatively impacted due to noise, increased traffic and the like. Generally speaking, development of the York District lands will increase the value of property in Guelph.

Road Construction: The Hanlon Expressway is not a very efficient artery for moving traffic due to the number of lights on it. The MTO is looking at eliminating some of the lights with over passes and the closure of some intersections. As a result, there will likely be some homeowners a little unhappy about the new route they would have to take to work, etc. That in itself shouldn’t affect the value of property but the increased noise from a more traveled highway that is more transport truck friendly might.

Seller’s Market: In the real estate market, supply and demand affect prices more than any other factor. The more people there are looking to buy versus those selling, the greater the pressure on prices to increase. The type of market is often measured by the Sales to New Listings Ratio, which measures sales in a month against the number of new homes put on the market that month. CMHC’s local economist recently presented at The Guelph Real Estate Pulse Conference hosted by my company. She described Guelph as being in a Seller’s Market due to the strong Sales to New Listings Ratio (chart). The benefit for property owners is increasing prices. Guelph’s outlook is for an approximate 4% increase in property values during 2008.

If you are selling: So how do the above help you? If you are considering selling you should be up to speed on some of the changes that are coming so that you make a good decision on where to buy next, and when you should be selling.

For example, I have had the odd client ask me if I thought it would be better to wait to sell when the market wasn’t so “hot” so they can get a better deal on the house they buy. Firstly, if that person knew that Guelph real estate prices have averaged a 7.25% increase per year over the past 70 years they wouldn’t think we are in a hot market. Secondly, I would rather sell in a Seller’s Market because my house would sell faster, and thirdly, if I was buying another home I would rather buy something when the price is going up. Buying in a Buyer’s Market means buying when prices are on the decline.

If you’re like me you probably already have far too many demands for your time. Why not ask someone else do the work? Tap into the local expertise of your real estate and mortgage professionals to save time and money.

Christopher Bisson is a partner with The Mortgage Centre and can be reached at 519-763-3900 x1003