Over the past 12 months, the world has been flipped on its axis. With a global pandemic taking over and weakening both the global and national economy, housing markets at large are experiencing an unexpected surge. On a national level, average home prices have increased by 22.8% from January 2020 to January 2021 based on CREA data. While some of this can be attributed to densely populated areas like the Greater Toronto Area (GTA) and Greater Vancouver, smaller markets across the country are not immune to this steep increase in the market. Through a more focused lens, across Ontario, real-estate markets have experienced a surge in prices leading to a red-hot sellers market in areas outside the GTA such as Kitchener-Waterloo. While the Kitchener-Waterloo housing market has traditionally been viewed as a buyer’s market in comparison to the GTA, the impacts of COVID-19 have led to many people migrating from the GTA to smaller communities. Kitchener-Waterloo real estate market has benefitted greatly from this new home-buying shift.
Changing the Landscape of Traditional Real-Estate Practices
With COVID-19 regulations still in full effect, the Provincial Government framework has impacted the real-estate market in a few ways; particularly, removing the ability to host open houses.
As Ontario has moved back into the colour-coded COVID-19 response framework, as of February 16, 2021, there are still regulations that must be followed depending upon the region and the colour in which that region has been designated. Kitchener-Waterloo (KW) currently (as of March 8, 2021) is in the red-control tier of the framework, meaning that open houses are not permitted and properties may be viewed by appointment only. This has led to virtual open-houses being held now and into the foreseeable future. Despite these guidelines restricting in-person viewings, the local market has continued to soar.
Ontario’s Steadily Climbing Real-Estate Market: Kitchener-Waterloo
As we move towards the close of the first quarter of 2021, the Kitchener-Waterloo housing market continues to be a sellers-market. The later-half of 2020 saw records being broken on a monthly basis in terms of both real-estate prices and the number of homes sold – in part due to low-interest rates.
Typically, the real-estate market slows down during the winter months. Taking into account this typical trend, the impacts of COVID-19 on the market are sure to continue into the busier times of the year and another surge in pricing may be experienced as we maneuver through the spring and early summer.
February 2021 saw homes in the KW area being sold on average for $752,289 which is approximately an 8.2% increase when compared to January of this year, and an impressive 18.6% jump compared to December 2020. Over the past 12 months, the average residential property price has shot up a whopping 32.1% when compared to February 2020.
This drastic inflation in price has had little-to-no impact on the number of homes sold, as the market continues to be as competitive as ever. The number of homes being sold each month continues to break records, and lead to bidding wars on most properties. In fact, in February 2021, 597 residential homes were sold through the Multiple Listing Service (MLS System) of the Kitchener-Waterloo Association of REALTORS (KWAR). When compared to the previous 10-year average for the month of February, this is an astonishing 46.7% increase in residential sales.
“Competition for homes continued to be extremely intense in February, leading to a record-breaking number of home sales for the month,” says Nicole Pohl, President of KWAR. “We continued to see dramatic increases in the average price in February due to the persistent and fierce competition for homes in our region combined with short supply.”
Will the Kitchener-Waterloo Housing Market Continue to Run Hot into the Spring and Summer Months?
While housing prices are increasing, the sustained low-interest rates have made it cheaper than ever to borrow; creating an inverse relationship that ultimately levels out and leads to buyers being able to pay for their desired property, even with the increase in price.
With the Kitchener-Waterloo housing market continuing to be one of the hottest housing markets in Ontario, it is safe to assume that it will continue to be a sellers-market for the foreseeable future. With demand being much higher than supply, there will continue to be bidding wars and multiple offers being put in by hopeful buyers – specifically when it comes to detached homes, as they are the most sought-after properties in the area.
Heading into the spring and summer months, expect another uptick in the real-estate market for the Kitchener-Waterloo region. With its proximity to the GTA, amenities of a large urban centre, and vast rural landscape, it is sure to remain as a top destination for those looking to migrate away from the Toronto area.