Kitchener and Waterloo real estate has experienced tremendous gain since the pandemic. Despite a slight drop during the 2022 real estate sector correction, the Kitchener-Waterloo housing market has seen renewed growth, driven by first-time buyers who are searching for livable suburban areas of the province.
What makes the region’s housing sector appealing is that it has transitioned into a balanced market, one that benefits both buyers and sellers. In other words, it is not paralleling the volatile times of the COVID-19 public health crisis.
Gary Kenning, a homeowner who is looking to shift from a three-bedroom home to a four-bedroom property, told CTV News that bidding wars are not pervasive anymore.
“You’re seeing prices that are a little more reasonable,” he said. “You’re not seeing these bidding wars going hundreds and thousands over asking. It just seems a little more stable.”
But can the Kitchener-Waterloo real estate market sustain this mix of stability and momentum heading into 2024? Some of the latest statistics are promising.
A Spotlight on the Kitchener-Waterloo Real Estate Market
According to new data from the Waterloo Region Association of REALTORS® (WRAR), residential property sales rose at an annualized pace of 4.6 per cent in June, totalling 780 units. Sales activity was also more than 12 per cent below the five-year average for this time of the year.
Three of the four residential property categories reported a modest uptick in transactions on a year-over-year basis:
- Detached: +5.9 per cent to 468 units
- Semi-detached: -32.3 per cent to 42 units
- Townhomes: +4.9 per cent to 149 units
- Condominiums: +22.9 per cent to 118 units
The average sales price for all residential units in the Kitchener-Waterloo real estate market advanced 6.4 per cent from June 2022 to $839,890. This was also up two percent on a month-over-month basis.
Sales price growth was mixed among the different property categories:
- Detached: +10.4 per cent to $1,005,519
- Semi-detached: -1.1 per cent to $691,507
- Townhomes: +0.2 per cent to $665,984
- Condominiums: -6.2 per cent to $470,163
Indeed, some of these numbers are close to matching what the 2023 RE/MAX Kitchener Waterloo Housing Market Outlook forecast last year. It anticipated the average price would be nearly $816,000 and that average sales would rise 15 per cent this year.
“The real estate market in Waterloo Region showed signs of a rebound in June, with monthly sales increasing on a year-over-year basis for the first time this year,” said Megan Bell, the president of WRAR, in a statement. “The total number of home sales are down nearly 25 percent for the first half of 2023 compared to last year but have been steadily climbing since January.”
“While the central bank raised its benchmark interest rate to 4.75 per cent near the beginning of the month, demand remains strong. Buyers and sellers can expect a competitive market as the number of homes for sale continues to be well below the long-term average,” Bell added.
Inventory data were mixed, association figures noted.
In June, new residential listings fell nearly 22 per cent to 1,321 units. This was 3.5 per cent above the ten-year average for June. Active residential listings plunged more than 23 per cent to 1,007 units. This was close to 33 per cent below the ten-year average for this time of the year.
That said, the number of months of inventory climbed 5.9 per cent year-over-year. This measurement considers how long it would take to exhaust current inventories at the present rate of sales activity. In addition, the number of days to sell in June came in at 15, up from 13 in June 2022 and below the five-year average of 17 days.
New housing construction activity was tepid in June. According to the Canada Mortgage and Housing Corporation (CMHC), housing starts rose more than three percent year-over-year in May to 218 units. In the first five months of 2023, housing starts surged soared 22 per cent compared to the first five months of 2022, totalling 1,271 units.
What About Interest Rates?
The Bank of Canada (BoC) raised interest rates again at its July policy meeting. It is unclear if the central bank will pull the trigger on another rate hike as the rate of inflation growth slows.
Although the Kitchener-Waterloo real estate market has weathered the high-rate storm clouds, rising interest rates could force more prospective homebuyers to sit on the sidelines.
“For buyers, where the affordability was already teetering, we could see them draw back from the market again,” Bell told CTV News in July.
Economists argue that monetary policymakers could eventually break something by raising interest rates too much into restrictive territory. Considering that real estate accounts for much of the nation’s gross domestic product, the BoC might need to be careful, industry experts contend.