Market Conditions: Where Are We Headed? The Evolving Role of Interest Rates in Home Affordability Interest rates have played a pivotal role in housing affordability over the past few years. Following a period of elevated rates designed to curb inflation, experts anticipate a gradual decline beginning in 2025. Should mortgage rates ease to approximately 3.5% for a five-year fixed term—with variable rates trending slightly lower—monthly payments will become more manageable, enhancing both affordability and buyer demand. As history has shown, declining rates typically fuel price appreciation—a dynamic that has repeated itself time and again in the housing market. Market Outlook: Price Trends & Inventory Home prices in Guelph and surrounding areas have remained resilient, with moderate single-digit growth projected for 2025. While certain markets, such as parts of Hamilton, may experience price corrections, areas with strong job markets and limited housing supply are expected to see continued appreciation, with year-over-year gains in the range of 4-6%. On the supply side, historically low inventory levels have challenged buyers, but an increase in new construction and seller activity could provide more options in the coming months. If more homes enter the market, buyers in Guelph and nearby areas may face less competition than in previous years—an advantage that may not persist in the long term. However, high-quality properties with superior square footage, larger lot sizes, and prime locations continue to attract strong demand, often receiving multiple offers, including cash bids. For buyers, securing the right property now could prove to be a strategic move before market conditions shift again. Is It the Right Time for You? Your Financial Readiness Before jumping into the market, assess your financial health: Do you have a solid down payment saved? Is your credit score strong enough for a favorable mortgage rate? Can you comfortably afford monthly payments, property taxes, and maintenance? The New First Home Savings Account is a great tool for saving for that first property be it investment or principle residence. If your financial foundation is strong, buying in 2025 could be a smart move, especially if rates decline and home prices continue to appreciate. Navigating Market Shifts: Federal Programs & Long-Term Strategies for Home Buyers New federal initiatives, such as the First Home Savings Account and updated Canadian Mortgage and Housing Corporation (CMHC) regulations allowing for minimum down payments on homes up to $1,500,000, aim to address affordability challenges in today’s market. These programs provide much-needed support for buyers looking to enter the market or move up the property ladder—especially in a landscape where elevated home prices have sidelined many prospective purchasers. Tom’s Final Thoughts: Should You Buy in 2025? While market fluctuations can create uncertainty, history has shown that time in the market consistently outperforms attempts to time the market. By prioritizing affordability and ensuring your purchase aligns with a sustainable, long-term strategy—whether as a primary residence or part of a broader investment plan—you position yourself for lasting success, regardless of short-term conditions. The decision to buy a home in 2025 will depend on a combination of market conditions and personal circumstances. If interest rates drop, inventory increases, and your financial situation is stable, buying could be a smart move. Thinking about buying in Guelph and surrounding area in 2025? Reach out to discuss your options and develop a strategy that fits your goals! POLICY INTEREST RATE The Bank of Canada (BoC) lowered the Policy Interest Rate on January 29th, 2025, balancing the need to contain inflation with supporting economic growth. The next Interest Rate Announcement is set for Wednesday, March 12, 2025. The BoC’s Policy Interest Rate is currently set at 3.00%.

This analysis focuses on student rental properties categorized by the number of bedrooms, price ranges, and parking considerations, providing insights into expected cash flow, appreciation potential, and additional factors for each type.

On January 29, 2025, the Bank of Canada announced a 25 basis point reduction in its policy interest rate, bringing it to 3.0%. This decision marks the sixth consecutive rate cut since June 2024, reflecting the central bank's ongoing response to evolving economic conditions.

First-time buyers and investors are particularly active, drawn by Guelph's strong local economy, proximity to major urban centers, and excellent quality of life. Detached homes and townhouses are seeing the most interest, while the condo market remains healthy with stable prices. As we approach the fall season, market conditions are expected to remain favorable for both buyers and sellers, though potential interest rate adjustments could influence future activity. Overall, Guelph's real estate market continues to be a dynamic environment with opportunities for growth. Key Insights Understanding the real estate market goes beyond a surface-level view, requiring a close examination of key metrics like Average Days on Market, Average Sales Price, Average Sales Volume, and Monthly Supply of Homes. These insights are essential for identifying market trends, gauging buyer and seller behavior, predicting future shifts, and making informed decisions. Sales Volume: The sales volume in Guelph has remained relatively stable throughout 2024, with a slight uptick in activity during the spring and summer months. However, overall transactions have seen a modest decline compared to previous years, reflecting a cautious buyer market. Sales Price: Home prices in Guelph have continued to show resilience despite fluctuating market conditions. The average sale price has seen a gradual increase, driven by strong demand for detached homes and a limited supply of new listings. Price growth has been particularly notable in sought-after neighborhoods and for properties with unique features. Average Days on Market: Properties in Guelph have generally been selling faster in 2024, with the average days on market decreasing. Well-priced and desirable homes have been moving quickly, often within a few weeks, as buyers aim to secure their preferred properties before interest rates or other economic factors shift. Monthly Supply of Homes: The monthly supply of homes in Guelph has remained tight throughout 2024, contributing to the competitive market environment. The supply has struggled to keep up with demand, leading to a seller’s market in many segments. Limited new construction and fewer new listings have further constrained the inventory Advice for Tenants: For tenants in Guelph, it's crucial to stay informed about the rental market trends and manage expectations in light of the evolving real estate landscape. Given the tight housing supply and increasing home prices, rental demand is likely to remain high. Tenants should consider securing leases sooner rather than later to avoid potential rent increases or shortages. Additionally, exploring different neighborhoods and rental options may help find more favorable terms. Staying aware of local tenant rights and potential rent control measures can also provide leverage in negotiations with landlords. Policy Interest Rate The Bank of Canada (BoC) has lowered the Policy Interest Rate by 25 basis points on September 4, 2024, balancing the need to contain inflation with supporting economic growth. The BoC’s Policy Interest Rate is currently set at 4.25%.

Rental properties come in many shapes and sizes, all with different benefits. For us, we like to focus on single family, or small multifamily homes (1-3 units) when analyzing and looking for our next deal.

Guelph, Ontario is a popular city in southern Ontario with a thriving real estate market. Here are some of the hottest neighbourhoods in Guelph for investing:

Finance Minister Freeland has introduced significant changes to the capital gains tax. The new policy aims to increase taxes on capital gains for individuals who make more than $250,000 from selling stock or property other than their primary residence. Currently, 50% of capital gains profits are taxed, compared to 100% of employment income. Under the new proposal, this will remain the case for the first $250,000 of capital gains income. However, for income above that level, the taxable amount will rise to 66.6%. This means the tax-exempt portion for capital gains exceeding $250,000 will be reduced to one-third. The lower exemption will also apply to businesses for all capital gains, not just those over $250,000. This change is expected to generate $19.4 billion for the government over the next five years. The additional capital gains taxes will likely reduce business capital spending, which is already at a low point, exacerbating Canada's productivity challenges. Higher taxes on capital gains also disincentivize investment in residential rental real estate, an area that requires more robust funding. The effects of the tax hike will extend beyond investors to average Canadians. For instance, individuals who bought a condo or cottage for retirement, recreation, or additional income may rush to sell before the June 25th deadline. This surge in inventory could lead to a significant drop in prices, benefiting buyers. However, the opposite scenario could also occur. The tax hike might prompt investors and homeowners to delay selling , causing a sharp decline in supply and driving prices higher . Faced with rising prices and limited options, some buyers might choose to postpone their purchases. Sellers could also set higher asking prices to offset the tax hike, making homeownership unaffordable for many, especially first-time buyers. The higher inclusion rate will also affect those who inherit property. Taxpayers who are gifted a property or inherit one and then sell it could face the higher capital gains tax rate. If the capital gains from selling a gifted or inherited property exceed $250,000, the seller could end up paying more in taxes. The increased capital gains inclusion rate will impact those planning to sell valuable properties with lower cost bases, altering the economics of real estate investment in rental properties. This sector needs more generous funding, and the new tax policy could hinder its growth. The proposed capital gains tax hike will have widespread implications, affecting not only investors but also regular home buyers, sellers, and inheritors. As the market adjusts to these changes, it will be crucial for Canadians to stay informed and consider the long-term impacts on their financial planning and real estate investments. ____ Original Article by Guiding Star Mortgage Group Available Here

Government of Canada bond yields, which influence fixed mortgage rates, have surged over 30 basis points (0.30%). As of Tuesday, the 5-year GoC bond yield hit a two-week high, breaking above 3.60%, while the U.S. 10-year Treasury yield also reached its highest point since mid-June. Several factors contribute to this turnaround: Political uncertainty in the USA, elections and the poor performance of Biden in that latest debate. US federal reserve uncertainty to commit to rate drops. This inflationary trend is likely to delay rate relief for variable-rate mortgage borrowers. While a rate cut from the Bank of Canada was previously expected in July, forecasts now suggest a cut is more likely in September. In summary, rising bond yields indicate that the recent trend of declining mortgage rates may pause or reverse, depending on future inflation rates and economic conditions. Securing rate holds and pre-approvals, which lock in rates for 90-120 days, is crucial during this period of volatility. For pre-construction, rate holds are available for 6 to 12 months, providing added stability. ____ Original Article by Guiding Star Mortgage Available Here

Today’s Interest Rates From March 2022 to July 2023, Canadians experienced a total of 4.75% in interest rate hikes from the Bank of Canada, equivalent to 19 consecutive 0.25% increases over just 16 months. Now, we can celebrate the second 0.25% rate decrease in as many months. Variable rate mortgage holders will see either lower payments or reduced amortization periods, providing welcome interest rate relief.

1. Get pre-approved for a mortgage: Before starting your home search, get pre-approved for a mortgage to understand how much you can afford. This will also give you an idea of your budget and help you make informed decisions. You can apply for pre-approval through a bank, credit union, or online mortgage broker. 2. Research, research, research: Guelph has a competitive real estate market, so it's essential to research neighbourhoods, schools, and amenities to find the right fit for your needs. Consider factors like commute time, public transportation options, nearby parks, and community events. 3. Work with a reputable real estate agent: A good real estate agent can guide you through the buying process and help you navigate any challenges that arise. Look for an agent who is familiar with Guelph's market and has experience working with first-time homebuyers. 4. Be prepared for closing costs: In addition to your down payment, be prepared to pay closing costs, which can range from 2-5% of the purchase price. These costs include things like title insurance, appraisal fees, and lawyer fees. Make sure to factor these costs into your budget. 5. Don't rush into it: Buying a home is a significant decision, and it's essential to take your time. Don't rush into a purchase just because you're excited about the process. Make sure you've considered all aspects of homeownership, including maintenance costs, property taxes, and insurance. Additional tips: Consider the condition of the property: Guelph has many older homes, so be prepared for potential renovation costs or needed repairs. Research local zoning laws: If you're interested in a particular neighbourhood or property type (e.g., a house with a backyard), research local zoning laws to ensure they align with your needs. Keep an eye on interest rates: If you're planning to finance your purchase with a mortgage, keep an eye on interest rates and consider locking in a rate if possible. By following these tips, you'll be well-prepared to navigate the home-buying process in Guelph and find your dream home!

Indigenous Peoples and European Settlement The area now known as Guelph was originally inhabited by the Attawandaron Nation, a subgroup of the Neutral Nation. In 1827, the British government established the town of Guelph as a military settlement, and it was named after King George IV of the United Kingdom. Agricultural Heritage Guelph's early economy was centred around agriculture, with many farmers settling in the area. This agricultural heritage has had a lasting impact on the city's real estate market, with many original farmsteads still standing and being restored today. Railway and Industrialization The arrival of the Grand Trunk Railway in 1855 brought significant changes to Guelph, facilitating trade and commerce. The city's industrial sector grew, and new residential areas developed to accommodate workers. University of Guelph Founded in 1964, the University of Guelph has played a crucial role in shaping the city's real estate market. Student housing, apartments, and commercial properties have been developed to cater to the growing student population. Immigration and Post-War Growth Following World War II, Guelph experienced rapid growth due to immigration from Europe and other parts of Canada. This influx of new residents led to an increase in housing demand and the development of new neighborhoods. Suburbanization As Guelph grew, suburbanization became more prominent, with many residents moving to newer areas outside of the city centre . This shift led to the development of new communities, such as Stonebridge and The Meadows. Conservation Efforts In recent decades, Guelph has made a concerted effort to preserve its natural heritage. The conservation of areas like the Speed River and Guelph Lake has enhanced the city's recreational spaces and natural beauty, making them attractive features for potential buyers. Revitalization Initiatives Downtown Guelph has undergone significant revitalization efforts in recent years, with projects like the reconstruction of Wyndham Street and the development of the Market Square area. These initiatives have contributed to increased property values and a more vibrant downtown atmosphere. These historical events and factors have had a lasting impact on Guelph's real estate market: Affordability Guelph's strong agricultural heritage has contributed to relatively affordable housing prices compared to other major cities in southern Ontario. Residential Density The city's compact size and mix of old and new neighbourhoods have created a high residential density, making it easier for people to live close to amenities and public transportation. Amenities The university, parks, and cultural attractions have drawn new residents to Guelph, creating a thriving community with a high quality of life. Infill Development As older homes are renovated or replaced, developers are building new infill projects that cater to modern tastes and needs. Historic Preservation Efforts to preserve historic buildings have maintained Guelph's character and charm, making it an attractive place for people who value heritage architecture. Understanding Guelph's history is essential for real estate investors and buyers alike. Recognizing how these historical factors have shaped the city can help you make informed decisions about which neighbourhoods to invest in or where to buy a home.