Ep 26: Beth and Ryan's 2026 Guelph real estate predictions (AUDIO VERSION)

AUDIO VERSION

Blog version: 2026 Guelph real estate predictions

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Transcript

Welcome to the Guelph Real Estate Report podcast with your host and Guelph realtor, Ryan Waller. This podcast is designed to provide information for those buying and selling homes in the Guelph area to make the process more informative, fun and a little less stressful. Now on with the show. Hello everyone and welcome back to the Guelph Real Estate Report podcast. My name is Ryan Waller and I work in Guelph Real Estate with my wife Beth. This is episode number 26, which is fitting for the topic today, which is 2026 Guelph Real Estate Predictions. These real estate predictions are something that Beth and I have been doing for a number of years, probably five years now. And each year we take a look at how the year that we're in has gone, as well as based on some of the factors, not only within the Guelph market, but within the Toronto, Ontario and Canadian markets that may influence Guelph the following year. Are we right. Mhm. I'd say probably 50% of the time we're right. Um but really the point of this is not to be shooting for 100% accuracy. The point of this is to have discussion in advance of what we think could happen the following year, based on what we know now. A year is a long time. And if someone told me that, uh, you know, this year went the way it did at the end of 2024, I would have been surprised because there are a lot of things that happened this year, even within a 90 day period of us recording our last video. Um, a lot of changes happen and sometimes you can't anticipate those things are coming. So we give our best guess based on the information we do know. And like I said, it's more for discussion to get an idea of what we're thinking based on what we know now. But first, let's take a quick look at 2025, because that sets the stage for where we're going in 2026, 2025, by all measures, was bizarre. Not only is it bizarre from an overall sales perspective, but just the seasonality this year. Uh, some of the things being hurdle over the US border at us are bizarre and just the general market is in a state that many people, including our broker, who have been doing this job for 30 ish years, have said that it reminds them very much of the early 90s. Of course, I wasn't in real estate in the early 90s, so I don't know that. Uh, but it does remind me from a corporate perspective of what we experienced in 2008 where, uh, sales sort of dropped because there was fear in the market. And eventually they picked up when confidence returned. But there was damage done in that initial drop. And I think that earlier this year, in 2025, when the U.S. made announcements about tariffs, it really spooked the market. And. I guess not just spooked, but had real implications on the Ontario market in particular, this area of Guelph, Kitchener-Waterloo, Brantford, Hamilton and the automotive and manufacturing sectors. So that definitely played a role early in the year. The government since then has cut the overnight rate four times at 0.25 basis points per announcement, so for a total of 1% decrease. So if you have a mortgage of about $500,000, let's say you are paying about $400 less per month than you were one year ago because of those rate declines, are they going to go down further? Maybe there's not much further they can go, but it's possible that we'll see some further declines. I've also read articles that talk about how there could actually be increases to the rate next year. So there's definitely a lot of uncertainty out there. And. Top line results in the golf real estate market this year. Um. Look, we're not having a great year compared to last year, which also wasn't great. Um, so when we look at just a comparison, we tend to use two metrics. One of them is the average price, and the other one is the number of units sold, because those can be wildly different numbers depending on how the market is. So, uh, in overall average price, uh, we're looking at about neutral to last year. Uh, so no increase in average price, no decrease in average price neutral. And when we talk about average price, we have to take it with a grain of salt. Because if the average price is neutral it doesn't mean the value of all homes in golf stayed the same. It means the mix of homes that did sell maintained the same average as the prior year. So if we have a really big run on $500,000 condo units, the average price is going to decline. That doesn't mean that $1 million home and exhibition park is declining. It means that there are a lot more homes selling that are cheaper, that are going to bring down the average. So, uh, one of our prior articles, we did take a look at the average price and took a look at neighborhood by neighborhood just to give a demonstration that, um, just because the average price is down, it doesn't mean everything is, uh, averaged out the same way. The overall number of houses that have sold in Guelph this year is down about 4%. That's not a huge number. Uh, the absolute number I think is less than 100. So, uh, there are less. And as realtors, when there are less transactions to happen, uh, there are two ends to every transaction. So a buy and a sell end. So that means roughly 200 transactions were taken out of the Guelph real estate market this year. Thankfully, our business is strong. We've had a great year, but it does put the pressure on, um, realtors who are down in business or potentially, you know, we're struggling in the first place. So it it does put pressure on the market. So in terms of real estate, uh, and the industry itself, well locally it is, you know, there are less transactions to be had. Um, so overall, um, we are in a market where it was neutral to slightly down. Um, and in most months this year, there were less transactions than last year. Uh, in most months this year, the average price was either slightly up or slightly down versus last year. We have noticed as of probably August, it seems to have taken a leg downward, and in particular in the condo segment, in particular, in the condo segment. We've seen the average price in a number of units slide earlier this year. Um, we would say that there is, you know, roughly 250 condos in the market and roughly 1.6 per day. We're moving. By the time you get to October, we are at the same number or greater number of condo units and we're less than one selling. So if you kind of visualize that the the inventory level is going up and the sales of those units are going down. So the wedge is getting bigger. And when the wedge gets bigger it means lower prices. So we'll talk about that in just a minute. So why don't we get into 2026 at about this time of year. October, November all sorts of people start coming out with their, um, thoughts on the market. And we actually were Beth and I have a morning show segment on, uh, magic FM in Guelph. And one of the first things the host said is, uh, this time, as Remax has come out with a their predictions for the year, and of course, they're on top of the news because they know that that's their job. Um, but kind of caught off us off guard. Um, and, uh, but Remax was calling for a slight decline in sales. I've read other reports that say the market is going to take off and consumer confidence is going to come back, and I've read other things or seen other things online where realtors are mortgage brokers are predicting, you know, the best year ever. And those things sort of chafe me because the market just doesn't take off by itself. There has to be a formula in the background of how the market gets to that point. In 2022. The market got to that point because there was very little supply. There were very few people selling houses. And there were a lot of people that wanted them. Money was easy. Approvals were easy. Appraisals were easy. The process was easy. But unfortunately, sometimes easy isn't better. And we are still dealing with today. Many of the people who bought during that time and are financially set back. Um, because they bought at a time where historically it just wasn't the best time. And so I think anybody who's telling you that 2026 is going to be a record year is lying because the same formula isn't there. We've got tons of inventory. We've got probably ten times more inventory available now than we did at that time in 2022. So unless the inventory suddenly evaporates and we're down to none and the buyers come out of nowhere, there is no formula that I can see. That would mean that prices would rise to new highs. No way. We did just see some stronger GDP numbers that came out, which, uh, potentially means the government won't reduce the interest rate at their announcement on December 10th, the final one of the year, I would anticipate that we've just gone through a cycle of, um, bringing the rates down. Now, we're in a situation where it's a holding pattern and we just wait it out, which is why we think in 2026, we're going to see a slight, very slight decline in the average price of a house in Guelph. We anticipate between 1 to 3% decline. And as I mentioned before, this doesn't mean that every house in Guelph declines 1 to 3. Some will be more, some will be less, some will actually increase in value in 2026. But the overall mix. Will change in a way that will bring the average price down. And here are a few of our reasons why we believe that it's important. If you're talking to your realtor and they give you a prediction, by the way, that they'll be able to back it up with some sort of actual facts. One of them is we believe that with these interest rate announcements over the past year for reductions, that it is going to be encouraging, more so encouraging than it was a year ago for first time buyers to get into the market, especially in the price points that they're looking at. Because those price points, let's say, 5 to 600,000, are the ones that are struggling right now because they're probably a condo where they're probably a townhouse where there is ample volume available, and you can negotiate hard if you're a buyer. So we anticipate there's going to be more first time buyers getting into the market at lower price points, which of course, if the mix changes and you have a lot more lower priced sales, the average price is going to decline. The second one is the investor market. And if you remember back maybe five years ago, probably around maybe late Covid, a lot of projects were being built. There were townhouse projects, mostly condo projects and tons of stacked townhouse projects that were being built all around the city. And of course, the price points on those were in the 5 to 600,000 range. And with the market coming to a bit of a halt on that segment, a lot of those builders or investors who bought in early with those got stuck. And so they are now in a position where they have to make some decisions. They can rent it. But there has been a lot of headline news about how the landlord tenant board or landlord tenant Act has been difficult for landlords, so many of them have chosen to leave them vacant until they find the suitable time to sell them. And if they're waiting, they're probably going to wait longer because the market isn't going to turn around anytime soon. A lot of those product, a lot of that product, I should say, is between I would say 4 to 600 now. And those landlords, investors are bleeding money on them every day, and they probably can't get the same rent they had, because there are a lot more rentals out there than there were even two years ago. So rent prices have come down. The University of Guelph has also decided that they are going to cut back on international students. So that means less demand, and we anticipate there's going to be a rush of those to hit the market. And that would be probably anything that is south of Stone road, um, south of Stone road is probably going to see a rush of product to hit the market. And of course, again, those are less than 600,000, less than the average, uh, more sales in that segment is going to bring the overall average price down. So those are two key contributors we believe are going to bring the price down in 2026, not necessarily that the rest of the market is softening, but that those segments are going to be selling faster than everything else, which is going to bring the average price down. Okay. Now into the number of units we anticipate this segment is going to rise. Remember, as I said earlier, there are less transactions that happened this year, about 4% less about 100 less transactions. And. When you have a situation like that, we would anticipate that there might be a bit of a bounce back. And on the blog version of this that we have. I have shown the number of units that have sold, um, and the number of units that have sold in Guelph this year is far below the prior years, and the average we anticipate there was a bit of a spook in the market, and that this number will bounce back to where it should be. So this is plus about another 100 transactions versus 2025. Um, this is going to be from related to what I just talked about, the average price where more first time buyers come into the market. Um, we have more investors listing their houses on the market. We also have renewals coming up in mortgages. We are going through the cycle of anybody who got the really cheap mortgage rates in in 2020 and 2021 are now coming up for renewal, and they are going to be in a situation where they have some tough calls to make. Do they renew their mortgage on their existing house and potentially have their mortgage payments double? Or do they decide to move to make sure that their mortgage payment is still the same as it was before, but now they have to downgrade their house or make some lifestyle changes. Or just lastly, decide not to move at all and just absorb the increased cost and stay where they are without doing anything. If that is the case, they're probably going to be in a situation where, uh, their funds are tighter. They're a lot tighter than they used to be. And so they are sort of just in a position where they're going to wait it out for the next little while and not do anything related to real estate. We believe, though, that the majority of people are going to do something, and it probably would, um, put them in a situation where they end up putting their house on the market. And the last, last one, and probably the saddest one is that there are people who just can't afford their houses. Uh, as we know, uh, the cost of groceries, the cost of home insurance, the cost of auto insurance, the cost of everything has gone up. And there are people who just can't afford it anymore. And those people are either going to move to a cheaper market, which we've seen, um, where they can get the style and size of the house. They wanted a cheaper price, or they decide just to go back to the rental market, or they come up with some other option. Maybe they'll move in with a friend, they'll buy something with a friend. Any number of other option. But we do anticipate, unfortunately, that there's going to be more, um, people who have to get out of their house, but also, uh, are being forced out by a lender because of nonpayment. These numbers have been on the rise for a little while. This isn't my personal opinion. Well, I guess it is my personal opinion, but it's supported by rising, um, bank default data that we've been seeing over the last little while. A few trends that we're looking at for 2026, uh, in pricing. One of them is neighborhood specific. We anticipate that we're going to see some increase in areas like village by the arboretum. It's a very specific buyer for this neighborhood. But, uh, this year they were well below the average. Uh, they typically sell about 30 houses a year, and they're below that this year. We anticipate that we're probably just going to see a rebound there. Um, it's a niche market, but, uh, it's always very desirable in the arboretum. We just think they had a bit of an off year in West Guelph. West Guelph is interesting because it tends to have some of the same size and style homes as. Other neighborhoods, but at a cheaper price. And it's probably because it's not as close to, um, the 401 as some of the South communities that have a bigger draw. Because of that, they can get into the GTA a lot easier. Um, but the West End is right beside the Hanlan that takes you right to the 401. Uh, they are making improvements at some point, maybe in my lifetime to highway seven, uh, into Kitchener and as Kitchener. The economy there does. Well, there are more and more people that are living in Guelph and commuting into Kitchener. So we anticipate that you're probably going to see a little bit of strength in the West End. They have lots of options. Um, depending on when you were in the West End last, it's probably changed. They have, uh, some of the cheapest condo options at 350 grand, but they also have out on Westra and some of those other streets out there. They have some well over $1 million homes out there. And, um, it is an interesting part of town that has a very loyal following. If you live in the West End, you probably are never leaving. Um, but keep an eye on that. And then lastly, uh, in terms of neighborhoods, South Guelph, we anticipate that. Uh, the GTA. Um, buyers that move in that I talked about earlier. Likely want to be in the South End. And so we anticipate that that's going to see the benefit there. Some of the neighborhoods there have struggled a little bit this year. Uh, I know, uh, one of the biggest decliners in terms of sales was in clear fields, the south part. Uh, down 42%, um, through September this year, uh, versus last year, one of the biggest decliners we've seen. We anticipate that'll bounce back for next year. Uh, student rental properties, because there are a lot of investors that are putting their properties on the market or were not able to rent them for the rent they needed because there is now more supply than there is demand or getting close to even a balanced market. Uh, we're going to find investors putting their houses on the market. Uh, we get calls all the time from parents who are looking for their kids. Uh, it's already started in full force. Uh, I've probably fielded a dozen calls from parents, uh, wanting to talk about rental properties for, uh, their kids. Um, whether to buy something or, in most cases, to rent something. Um, and so that is an interesting market. It's it's evolving and, uh, but it is softening just a little bit. And lastly, on the million dollar segment. This is an interesting one because historically, 15 to 20% of houses in Guelph sell over $1 million. That saw a bit of strength earlier this year, where in some months it was a 25 or 30%. But by the time we rolled into September, it started softening in November, which I'll update on the full month in the next day or two. Um, through mid-November it was only 3%. So, um, we'll keep an eye on this. I think this is a segment where, uh, as average prices probably slowly start to decline. Houses that were selling over a million are now selling in the nines. And so just generally organically, there's going to be less of that product available. Um, so I'll keep an eye on that and update as the year moves on that. Maybe we'll see strength here. I think we're going to see strength more so uh, in the but it seems weird to say. But the luxury golf segment of things 1.4 million and above We are seeing evidence of that happening now. And, um, there are people that are coming from the GTA with some money and they want to move up, or someone who's getting a great mortgage rate and moving from their smaller home to a more expensive home. Um, but we are seeing a bit of a bump up there. So million dollar mark itself might be a little soft, but as you get higher it seems to be holding its own. That is all for our predictions. Uh, of course we have a blog on this that we update. I update every two weeks on the golf real estate market on a separate blog. And, uh, take a look on our website at Beth and Ryan. You can subscribe to our newsletter to get updates once per month. Not spam. Everything on those is written by us or our office. And, um, that is it. Uh, I hope you have a nice Christmas and we will talk to you with episode number 27, which is the full month of November in the next few days.