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Kitchener Waterloo housing market to favour sellers in 2022, prices expected to rise 6%

The Kitchener Waterloo housing market is currently a seller’s market, which is anticipated to continue in 2022, with rising demand for homes and a lack of supply continuing to exert pressure on the market. By the end of 2021, townhomes had experienced the largest increase in average sale price year-over-year, rising from $469,212 in 2020 to $620,587 (+32.3%); followed by single-detached homes, which increased to $912,690 (+26.8%) from $719,723 in 2020; and condos, averaging $440,022 (+10.8%) from $397,294 in 2020.

Lack of inventory is still the pressing issue in the Kitchener-Waterloo housing market. Move-over and foreign buyers are expected to continue driving demand in the region in 2022, as many first-time homebuyers have been priced out of the local market. Townhome properties continue to experience higher levels of demand and activity, thanks to their lower price point when compared to their detached counterparts, while offering more living space than a condo. Space and affordability is also factors driving increased activity in rural areas just outside of the core city.

According to Marty Green, broker at RE/MAX Twin City Realty, the Kitchener-Waterloo housing market has seen many homebuyers going beyond their means in order to purchase a home locally. On the flip side, Green has also reported an increase in inter-provincial migration with many residents selling and moving to the east coast, or to northern Ontario.

Condo sales in the Kitchener Waterloo housing market seem to be very strong, with no massive price increases yet. This is anticipated to continue through 2022, with young couples driving condo demand.

Young families are most commonly purchasing homes in the new construction market, with an expected boom in townhomes development in the region this year.

The average residential sale price across all property types in the Kitchener Waterloo housing market is anticipated to increase by 6% in 2022.

KITCHENER-WATERLOO ON_2022 Canadian Housing Market Outlook Report one-sheet

Canadian Housing Market Outlook for 2022

From a national perspective, RE/MAX is anticipating steady price growth across the Canadian real estate market in 2022, with inter-provincial migration continuing to be a key driver of housing activity in many regions, based on surveys of RE/MAX brokers and agents, as reflected in the 2022 Canadian Housing Market Outlook Report. The ongoing housing supply shortage is likely to continue, putting upward pressure on prices. As a result of these factors, RE/MAX Canada estimates a 9.2-per-cent increase in average residential sales prices across the country*.

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“Based on feedback from our brokers and agents, the inter-provincial relocation trend that we began to see in the summer of 2020 still remains very strong and is expected to continue into 2022,” says Christopher Alexander, President, RE/MAX Canada. “Less-dense cities and neighbourhoods offer buyers the prospect of greater affordability, along with liveability factors such as more space. In order for these regions to retain these appealing qualities and their relative market balance, housing supply needs to be added. Without more homes and in the face of rising demand, there’s potential for conditions in these regions to shift further.”

Despite the global pandemic, many Canadians still feel confident in the real estate market. According to a Leger survey conducted on behalf of RE/MAX Canada, 49 per cent of respondents believe Canadian real estate will remain one of their best investment options in 2022 (59 per cent of homeowners vs. 34 per cent non-homeowners which included renters, those not looking buy, and those currently looking to purchase). Additionally, 49 per cent of respondents are confident the Canadian real estate market will remain steady next year.

“Canadians recognize the value and investment potential in their homes. However, market challenges such as rising prices and limited supply have impacted local markets from coast-to-coast, causing angst this past year among those looking to get into the market and those hoping to move up in it,” says Elton Ash, Executive Vice President, RE/MAX Canada. “Despite this, it’s encouraging to see that many are feeling confident in the housing market in 2022 and view Canadian real estate as a solid investment.”

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Additional findings from the 2022 Canadian Housing Market Outlook Report

  • Two-in-five Canadians trust their agent to advise them during the current real estate landscape (43 per cent)
  • 23 per cent of Canadians now have a greater desire to build their own home or buy pre-construction
  • 26 per cent of Canadians have the desire to purchase a home while mortgage rates remain low
  • 62 per cent of Canadians currently own a home. This is higher among those ages 35+ (70 per cent) compared with Millennials, ages 18-34 (42 per cent)
  • The majority of Canadians (72 per cent) said rising home prices did not impact their purchasing decisions in 2021.

Kitchener Waterloo housing market to favour sellers in 2021, prices expected to rise 7%

The Kitchener Waterloo housing market is expected to remain in seller’s market territory in 2021, characterized by a continued lack of housing supply that impacted the market in 2020. Low inventory has been a common trend across many Ontario housing markets, putting prices on an upward trajectory. Indeed, the average price in the Kitchener-Waterloo housing market increased to $630,820 in 2020 (Jan. 1 – Oct. 31), up from $530,376 in 2019 (Jan. 1 – Dec. 31). With similar conditions expected to continue next year, the RE/MAX outlook for Kitchener Waterloo residential real estate in 2021 is an increase in average price of 7%, to approximately $674,977 across all property types.

Kitchener Waterloo housing market outlook 2021Kitchener Waterloo housing market outlook 2021

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Who’s driving the Kitchener Waterloo housing market?

Kitchener Waterloo’s current seller’s market should persist in 2021. Given the continued increase in average home prices over the course of 2020, it is expected that fewer buyers in 2021 will be able to afford and purchase at the same rate they did in 2020. The region experienced an influx of buyers coming from large cities such as Toronto, many of whom are looking for more outdoor space and backyards.

This has been a common trend across many Canadian housing markets as well as regions abroad, as homebuyers seek more square footage and green space outside of urban areas in the wake of COVID-19. Factors impacting this broader trend include the rise in remote work, the desire for more space and less density, as well as lower housing prices.

Most first-time homebuyers in Kitchener Waterloo are young couples in search of condominiums. Next year, the dramatic decrease in inventory, and increase in demand and home prices may cause some difficulty for first-time homebuyers looking to get into the market. Similarly, move-up buyers are also facing higher prices and limited supply, which will make purchasing a new home difficult in 2021.

The demand for luxury properties continues to grow, along with the demand for the new construction market.

The top neighbourhoods in 2020 and prospectively in 2021 in Kitchener Waterloo are Pioneer Park/Doon, Laurentian Hills/Country Hills West, and Uptown Waterloo.

Canadian Housing Market in 2021

Canadians are on the move. RE/MAX isn’t calling this an “exodus,” but the re-location trend across the Canadian housing market is real, and it’s just one focus of the RE/MAX 2021 Housing Market Outlook Report. RE/MAX Canada anticipates healthy housing price growth at the national level, with move-up and move-over buyers continuing to drive activity in many regions across the Canadian housing market. An ongoing and widespread housing supply shortage is likely to continue, presenting challenges for homebuyers and putting upward pressure on prices.

Due to these factors, the 2021 RE/MAX 2021 outlook for average residential prices is an estimate of +4% to +6% nation-wide. Here’s the regional break-down:

Canadian Housing Market Outlook REMAX 2021 Data TableCanadian Housing Market Outlook REMAX 2021 Data Table

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Additional report findings include:

  • 35% of RE/MAX brokers indicate that “move-over” buyers from other cities and provinces will continue to spark market activity in 2021
  • 45% of RE/MAX brokers indicate that move-up buyers will likely be a primary driver of the housing market demand in 2021
  • Half of Canadians (53%) are confident that Canada’s housing markets will remain steady in 2021
  • 52% of Canadians believe real estate will remain one of the best investment options in 2021

“We’ve seen a lot of anecdotal evidence since the summer that households are considering significant lifestyle changes by relocating to less-dense cities and neighbourhoods,” says Christopher Alexander, Executive Vice President and Regional Director, RE/MAX of Ontario-Atlantic Canada. “This has sparked unprecedented sales this year in suburban and rural parts of Canada and we expect this trend to continue in 2021.”

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Sales in the Kitchener-Waterloo housing market experienced a 60% decline in real estate activity at the peak of the pandemic, but according to the RE/MAX Fall Market Outlook Report, average home prices managed to remain steady. With many sellers holding off on listing their homes during the spring, the current market is seeing an increased amount of activity due to pent-up demand, with multiple offers on homes, sometimes in the double digits, not uncommon.

Looking ahead, market optimism will be very closely tied with the number of available jobs in the region; should employers in Kitchener-Waterloo begin to relocate to the United States, depending on the strength of the Canadian dollar and the number of American companies currently operating in the region, average home prices could potentially fall. However, the Kitchener-Waterloo housing market is currently in strong seller’s territory across the board (residential, recreational and luxury property segments), with many buyers looking to purchase larger recreational properties with more space given the cancellation of travel plans and a growing desire to move away from densely populated areas.

Based on these factors, the Kitchener-Waterloo housing market is expected to see a 3% increase in average residential prices for the remainder of the year.

Ontario Real Estate Trends

What’s been happening across other Ontario real estate markets? With the province being one of the hardest-hit regions in Canada, markets such as Niagara, Mississauga and Kitchener-Waterloo experienced significant drops in activity. However, come June, they bounced back aggressively as economies began to reopen. With all of Ontario now in phase three of re-opening and consumers more comfortable engaging in the market, market activity in Ontario is expected to remain steady in the fall, with modest price increases of up to 6% in some regions.

Canadian Housing Market Heat Map Fall 2020Canadian Housing Market Heat Map Fall 2020

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Canadian Housing Market Trends

Leading indicators from RE/MAX brokers and agents across Canada’s housing market point to a strong market for the remainder of 2020. According to the RE/MAX Fall Market Outlook Report, RE/MAX brokers suggest that the average residential sale price in Canada could increase by 4.6% during the remainder of the year. This is compared to the 3.7% increase that was predicted in late 2019.

Canadian Housing Market Data Table Fall 2020Canadian Housing Market Data Table Fall 2020

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The pandemic has prompted many Canadians to reassess their living situations. According to a survey conducted by Leger on behalf of RE/MAX Canada, 32% of Canadians no longer want to live in large urban centres, and instead would opt for rural or suburban communities. This trend is stronger among Canadians under the age of 55 than those in the 55+ age group.

Not only are Canadians more motivated to leave cities, but changes in work and life dynamics have also shifted their needs and wants for their homes. According to the survey, 44% of Canadians would like a home with more space for personal amenities, such as a pool, balcony or a large yard.

Canadians equally split on their confidence in the housing market

Canadians are almost equally split in their confidence in Canada’s real estate market, with 39% as confident as they were prior to the pandemic, and 37% slightly less confident. When it comes to the prospect of a second wave of COVID-19, 56% of Canadians who are feeling confident in Canada’s real estate market are still likely to buy or sell.

“The classically hot spring market that was pushed to the summer months due to the COVID-19 pandemic created a surprisingly strong market across Canada and across all market segments,” says Christopher Alexander, Executive Vice President and Regional Director, RE/MAX of Ontario-Atlantic Canada. “Looking ahead, government financial aid programs may be coming to an end in September, which could potentially impact future activity; however, the pent-up demand and low inventory dynamic may keep prices steady and bolster activity for the remainder of 2020. Overall, we are very confident in the long-term durability of the market.” 

Additional highlights from the 2020 RE/MAX Fall Market Outlook Report Survey:

  • 48% of Canadians would like to live closer to green spaces
  • 48% of Canadians say it’s more important than ever to live in a community close to hospitals and clinics
  • 33% of Canadians would like more square footage in their home and have realized they need more space
  • 44% of Canadians want a home with more outdoor space and personal amenities (i.e. balcony, pool etc.)

About the 2020 RE/MAX Fall Market Outlook Report

The 2020 RE/MAX Fall Market Outlook Report includes data and insights supplied by RE/MAX brokerages. RE/MAX brokers and agents are surveyed on market activity and local developments.

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Seller’s market expected for 2020, prices to increase 7%

The Kitchener Waterloo housing market will continue to favour sellers in 2020, with residential prices expected to increase by seven per cent.

Kitchener-Waterloo sat in seller’s market territory in 2019, and the trend will likely continue into 2020 due to low inventory and multiple-offer scenarios in the region. Housing affordability has been a major concern over the past year. The construction of affordable housing has not been able to keep up with the demand. Immigration, lack of supply and the aftereffects of the stress test are all expected to continue putting pressure on the housing market and impacting activity in 2020.

First-time homebuyers and foreign buyers drove demand in 2019, with the most in-demand neighbourhoods including Doon, Laurentian Hills and Huron Park.

Continued population growth and strong employment numbers are expected to boost the Kitchener-Waterloo housing market in 2020.

Kitchener Waterloo housing market report

From a national perspective, RE/MAX anticipates a leveling out of the highs and lows that characterized the Canadian housing market in 2019, particularly in Vancouver and Toronto, as we move into 2020. Healthy price increases are expected, with an estimated 3.7-per-cent increase in the average national residential sales price, according to the RE/MAX 2020 Housing Market Outlook Report.

Most individual markets surveyed across Canada experienced moderate price increases year-over-year from 2018 to 2019. However, some regions in Ontario continue to experience higher-than-normal gains, including London (+10.7 per cent), Windsor (+11 per cent), Ottawa (+11.7 per cent) and Niagara (+12.9 per cent).

“Southern Ontario is witnessing some incredibly strong price appreciation, with many regions seeing double-digit gains,” says Christopher Alexander, Executive Vice President and Regional Director, RE/MAX of Ontario-Atlantic Canada. “Thanks to the region’s resilient economy, staggering population growth and relentless development, the 2020 market looks very optimistic.”

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