After the average residential sales value peaked in May 2017 at nearly $500,000, the region of Waterloo saw the local market soften in both volume and value for three straight months. The drop-off in activity was primarily attributed to housing affordability measures introduced by the provincial and federal government in the spring. The measures have included stronger stress tests for Buyers (*the latest being even those with a 20% downpayment), a foreign Buyers tax which mainly targeted Toronto, and multiple interest rate hikes.
What does this mean for potential Buyers and Sellers in Waterloo Region?
Firstly, the market has already begun to firm up in Kitchener/Waterloo. Values have held steady and even started incremental increases again month over month. The average residential sales value in August was $441,992, but that moved back up to $455,079 for September and still represents an increase of 12% from September 2016.
Secondly, provincial affordability measures mostly targeted the GTA. As a result, since the affordability measures were implemented, Toronto has seen more residential real estate value erosion then Waterloo Region. Analysis of purchasing data in Ontario shows that foreign purchasers made up nearly 7% of purchases in Toronto through May 2017 while in Waterloo Region the number was below 2%. Erosion of Toronto prices from their peak has helped affordability for some Torontonians, but there are still many other Buyers who are seeking to relocate from Toronto into Waterloo Region where prices remain much lower, this has helped to insulate our market.
Finally, development continues to surge in the cities of Kitchener-Waterloo. Since the announcement of the LRT, over $2 billion in real estate investment has flooded into our region resulting in exciting projects like the SIXO, recently announced as a joint project with local developers in the downtown.
Benjamins Realty believes homeowners can expect values to hold firm and begin a slower march back to peak prices seen this past spring. Inventory remains low, and there is plenty of Buyer demand so compared to historical averages it is still a Seller’s market. Buyers can enjoy much more stable market conditions then this past spring, and although multiple offers and bidding wars are still common, they are not expected for every listing. Buyers can once again confidently make conditional offers in order to hedge risk.
For further market insight, please don’t hesitate to contact us at Benjamins Realty with questions or thoughts.