Guelph Market Update with Beth & Ryan Waller


Despite a slowing property market in some areas and further expected interest rate increases, the demand for real estate investment properties on the edges of the GTA appears to continue to be strong.

Is that still the case?

Where are the opportunities for reasonable house prices and cash-flowing rental markets?

Join us for the next stop on our virtual tour of Ontario markets with expert insights and market updates for Guelph.

Katherine: We've got Ryan Waller with us this evening with wife, Beth, they are one of the top realtor teams in the Guelph market. Prior to becoming licensed for real estate in 2015, Ryan had a successful 20 year corporate career in sales and marketing.

Like with big companies like Kimberly Clark in Nestle, et cetera. You really know when you meet Ryan, when you talk to him, literally that customer service is very top of his lines and just part of who he is. They've been a trusted real estate voice in the Guelph media.

Since 2018, via wealth's main news source the Guelph today, and in 2021, Beth and Ryan were thankful to have been in the top 0.5% of volume sales in Guelph, and continuing the growth trend into 2022. Thank you so much and welcome.

Ryan: My pleasure. Thank you. I'm excited to be here. This is fun. I wanna talk to everyone today, a little bit about Guelph and the real estate market we have here and so many other smaller cities outside of Toronto were probably facing many similar challenges. Three or four months ago, you wouldn't have called it really a challenge in the market. It would've been more of just a strong seller's market and there wasn't enough supply to meet the demand, but it's like many have experienced to quickly change the market.

This map gives an idea of where Guelph is for those that don't know the area, all that well, or are not familiar with Guelph. Here, you can see the city of Toronto, obviously a huge space of the GTA. The GTA comes all the way around on the West side, Brampton, Mississauga into Milton.

Once you pass Milton, there's a green space that goes all the way to Guelph. Guelph is situated on an island over here on its own. We are about 13 kilometers off of the 401. What we've been saying, and a lot of the articles we've been writing for Guelph today over the last number of years have been Guelph is part of what we call the 401 effect.

The closer you go away from Toronto on the 401 Westbound, the cheaper the housing gets. We are less expensive than Milton. We are less expensive than Mississauga and we are less expensive than Toronto. I'll get into that a little bit. What's been fueling a lot of the growth in Guelph over the past number of years.

Guelph here is a unique city in that we are 13 kilometers off the 401, but it's a very interesting geography. Once you get off of the 401 and come to Guelph. We're a city of about 140,000 people. We've had a lot of popularity in the past number of years, as you can see from this map from the number six position at the bottom, this is closest to the 401 down here.

A lot of commuters have moved into Guelph into this area, into the number six and number five, where they've been able to commute into the GTA and commuting from this part of Guelph into Toronto. To the airport, it could be 30 to 45 minutes depending on where you go and where the traffic is, but to get downtown Toronto without traffic, you can get there in about an hour, with traffic sometimes it could be as long as an hour and a half or longer, depending on how bad it is in Milton.

It is commutable for many people. This is what's made Guelph really popular for Toronto buyers over the past two years, especially during the pandemic. When everybody was working from home in the top part of Guelph as you can see numbers 1, 2, 3, and 4 we called the Northern part of Guelph and it's less sensitive to Toronto area buyers or commuters.

We do have a lot of people living in the older part of Guelph, especially number five that are living in century homes that live and work in Guelph. As you get to number four I've got an arrow over here, 15 kilometers West are our friends in Kitchener. It's easy access over there on highway seven. Just over to the right is access to Brampton and some of the highways off to the East side of Guelph.

We're a green city. We're very proud to be a green city. I believe we're the only green party elected in Ontario for the second time in a row in 2022, that just the election just passed, Mike Schreiner was elected. Very green city partially that's due to the agriculture elements, to the University of Guelph. We're a small city but we're getting to be a little bit of a bigger city. We like the small city aspects, but we also have to accept that we are going to be a big city too.

We have a lot more of the chains. The big chains that we didn't have, 5 or even 10 years ago. We have high employment rates in Canada. We have low vacancy rates in Canada and we'll talk a little in Guelph. We have low vacancy rates specifically for rentals. I'll talk a little bit about that. We've also been known as a University town. There is obviously a very big university in Guelph. It drives a lot of students' economic activity to the market. Parents of their children move to Guelph, a lot of investors are around the downtown core where the university is.

It's an interesting market and dynamic in that way. This is an article from the Toronto star that just came out in February. Guelph population growth, outpaces, preventional, and national averages. As I mentioned before, most of this drive has been from GTA buyers over the past number of years. What they're doing is what we've called down pricing. They are selling their $2 million homes in Toronto and buying a $1 million home, potentially the same home, or even upgrading and pocketing the rest of the money. This was extremely popular at the beginning.

It happened before COVID, but it really ramped up after COVID and many of our clients that we have had calls from have helped them find a house in Guelph and move from Toronto. It is a real thing. They've been aggressively buying in Guelph. However, with all good things, it might slow down a little bit. What we've started to see is that listings have started to increase with interest rate hikes and inflation numbers and people going back to the office to work.

A regular spring market listing inventory is going up. The challenge is that there are no buyers to go along with that listing inventory. We've seen the regular seasonal inventory come into the market. Typically, what happens is it gets bought up and you tread along at a regular level into a spring market, especially in May and June and this year we're not seeing it.

Listings are on the increase and buyers are on the decline. As a result we see the average median price there, take a drop. It is a really interesting dynamic. I think that many people, I'm sure the other speakers from Kitchener and Waterloo in Cambridge will echo this, that it's been a very interesting marketing for Guelph like many others where prices have started to soften a little bit.

There is a lot of inventory out there. However, there's also a lot of opportunity out there and just because there is an inventory general. Doesn't mean that everything is being treated the same way, condos in Guelph. It's a relatively new thing in the past 10 years in Guelph. We have a lot of condo development, a lot of investors coming into Guelph to buy condos.

They typically are at a cheaper price point. As a result, the condo market has remained. Extremely resilient in Guelph. We're seeing a lot of investors come in here buy up the condo developments and either rent them out or move in on their own and keep it as a second property or even downsize. We've had Toronto clients move here in downsize as well. A lot of development there in terms of new developments in Guelph or condos, there are some, although there aren't as many probably there have been in the past.

Most of the growth in Guelph is coming from the Southern part. There's not a lot of developments that are currently in the works. Just an example of where the market is at. Although we're still having a strong year, over the years in Guelph we are in a situation where we're starting to see some changes. I brought an example here that talks a little bit about some of the opportunities that we see. In Guelph and like other markets, bungalows, especially the post-war bungalows have been great investments for people because you can take a main floor, three bedrooms.

You could make an accessory apartment in the basement and make it a multi-level multi residential duplex and rent them out. These have always remained strong and I kicked myself that I didn't buy 10 of these 10 years ago when they were a third of the price. But In February, these were going for around between 900 a million bucks. This is a real example. This happened in February. It's not an anomaly.

This is an indicator of the market. We were in Edmonton drive, which is in a very popular Saint George's park. It was a three plus one bedroom, two bathroom sold for a million bucks. In February, we wouldn't shake a stick at that. Here we are in June and on another street, a neighboring street, you can see by these two pictures, they look very similar to each other. The one on the right is a four plus one bedroom. Four upstairs and one in the basement, two bathrooms and sold for 830. This is exactly what we're seeing in our market, which is probably indicative of other markets out there. Does anyone have any questions so far that you want to jump in?

Katherine: We had one in the chat, but you answered it because it was about what the trends look like as of May 2022, and you definitely covered it.

Ryan: It's interesting because part of the challenge that we've seen in Guelph in the past. Let's just get rid of this chat here. Part of the challenge we've seen in Guelph over the past number of months is that the Toronto market was fueling Guelph for so long. Many buyers of South Guelph homes were coming from Brampton and Mississauga. Beth and I joked that we were showing houses in February and of the cards on the table. 8 out of 10 of them were from Brampton and it was really crazy to think that so much outside influence was coming into Guelph and they were really driving the prices.

We also found that in the city of Toronto, proper buyers in Guelph were extremely interested in the downtown course, which just goes to show like a bit of a shift of the way people buy in their patterns. Downtown Toronto focused on the older stuff Brampton Mississauga, Milton focused on the newer parts of wealth and what we started to find is without those buyers now in May, June in April, May, June and Guelph, we're really in a situation where Guelph agents are dealing with Guelph agents and Guelph buyers are upgrading or downgrading within their own city. It's become somewhat insular versus what it was just 12 weeks ago.

Katherine: That's really interesting cuz some of the facts that you've brought up are a little bit opposite to what one would expect. This is really great information. We've just had another question come in. It says what percent discount could a buyer expect if they're selling in Toronto and moving to Guelph.

Ryan: It's a good question because that question 12 weeks ago, would've probably been, if you were selling a home in Toronto and buying the same home style in Guelph, you would probably expect a 20% discount. What happened was the Guelph crisis rose so quickly so fast that the discount was nominal. It was 5%.

Buyers were at the point where they were saying if I have to go back to work and if interest rates are going up and the cost move, all of that just doesn't make sense for me. I'm just gonna stick it out. I'm gonna move to a, to a different part of town or I'm gonna move to mississauga, or I won't move at all, but there was a 20% discount move to Guelph that quickly went away. It was closer to five by the peak.

Katherine: That's a big drop. What segments of the Guelph real estate market are selling? Because they're coming from outside or inside?

Ryan: That's right. What we talk about here is a couple of different things. What I'll do is I'll talk a little bit about the individual segments of homes, but I can also talk a little bit about prices, which is an interesting element on its own. In Guelph overall medium sale price versus May is up 15%, May 20 year over year, may versus may is up 15%. April versus April, we're starting to see, get down trend. 15% by last year, but still slowly starting to creep downwards this year. That growth is really coming from the condo market as I had mentioned.

You can see the condo market is up 16% year over year versus semis and detached at 6.2 and detached 10.6. You're starting to see, so this is where the growth is. As I had mentioned more units for sale here, as more developments come into Guelph, and there are more sales here, but the challenge we started to find like many markets is that first time buyers really struggled to get into the market.

When they couldn't get into a detached home anymore, because it was out of their price range. Instead of saying, I'm not getting into the market, They considered their other options and they started buying into other formats. Instead of a detached home or a semi, which was too expensive, they said I'm gonna buy a condo. That really propped up that market where you know, before, when they had more options. It really wasn't an option to move into a condo, but it started to pick up and with more developments and more sales.

It really is an opportunity for somebody who's looking to get into the Guelph market because they do remain the strongest and most resilient part of our market. In terms of price points the average price of a home and Guelph being $834,900. We look at our data on a weekly basis. In terms of a price segment, we have a real Guelph Homes right now in the $750,000 to $1,000,000 mark, because that makes sense where our average price is around $834,000.

The $750,000 to $1,000,000 is huge right now. And because there's so many of them, they make up about 40% of the total listings. The challenge is that those aren't moving. Because buyers have choice and they're shopping around and getting the best deal on that segment, homes over a million dollars in Guelph right now are still pretty strong.

Partially, because we don't have that many of them as many of them as we used to, but there's less people that can buy them. It's unlikely in Guelph, you're going to find a home under $400,000 anymore of any format. Those are pretty much gone.

Katherine: You had a crystal ball. Would you predict the market price forecast would be by the end of 2022?

Ryan: Here's what I think. We've been talking about this a lot. Probably, a lot of people have been talking about this, but from our perspective we see it bouncing along where it is right now for the next little while. July and August in our market, similar in seasonality to Christmas, it's slow. People go on vacation. They don't do much. We anticipate it's gonna bump along for the next little while. I think that September comes, which is the spring market. Many that we will see a bit of an uptick.

I think we're gonna see a bit of uptick in activity and a bit of an increase in average prices as well. I think much and this is, I dunno, maybe I'm hopeful. I don't know. I think much like COVID and if we look back on April, 2020, there was a period of time where there was panic and fear and people stopped. Once they became accustomed to what was happening okay. We know what's happening.

We know the measures that are out there. We know the rules of engagement. We know that we can probably expect activity to start again. I don't anticipate we're gonna be on the same playing field that we were at the beginning of COVID. I don't think it's to that extreme, but I do think we're going to start to see people settle into positions, understand how interest rates are going to adjust their budgets accordingly. I think we're gonna start to see in Guelph.

Katherine: That's really nice. That's a good outlook. That's something to look forward to as you've broken it down. This is a good time to invest. Let's look at this. Here's the different areas. This has been awesome. We do have a couple more questions that have come in, but we are getting tighter on our time here. I'm gonna just toss 'em out to you quickly. What are the market rents in Guelph right now?

Ryan: I actually have that, average rents in Guelph. I've got a couple different ones. I've got Guelph here. This is I love these guys. They outline the market rent. Here we go. Guelph is a very expensive market. We have very low rental inventory. Prices are at a premium one bedroom, 1,811 and two bedroom, 2,179.

Katherine: That's good to know. If I live in a university town, and Guelph is a university town. If I'm considering investing in student rental in Guelph, where should I be looking?

Ryan: There's a couple different places around the downtown core 142 York road is almost exclusively a student development. It's just outside the downtown core, the four bedroom units 302 college avenue just on college Ave, right down the street from the university where it is right on college. It's a great one down Gordon street. There's a lot of student developments. It's 1,155, 1,055. All of those are market rent for a rental in Guelph for a student, a room rent is about $500 to $700 a month in Guelph per student room.

Katherine: Excellent. That's a lot of information. Thank you very much. I appreciate it greatly.