Latest KW Market Analysis, CMHC Predicts Moderate Growth.
The October 2018 sales statistics for Kitchener-Waterloo’s housing market were recently released. The K-W Board’s monthly report highlighted a rebounding sales volume (up 7.8% year over year), this was a reasonably significant increase compared to the month previous which saw a year over decline (-4.7%).
Residential sales values were also up year-over-year averaging out at a 7.7% increase. The condominium sector continues to lead price growth and saw the most substantial value increase at 24.1% compared to October of last year. Townhouses and semi-detached homes followed condos at a solid 13.8% increase while detached property was up 6.2%. The average residential transaction in our region has continued to hover around 490k for the last three months and locked in at $489,975 for October 2018.
During the real estate run of 2016-2017, detached homes were heavily outpacing condominiums and townhomes in value growth, but due to recent rising interest rates and tightened mortgage regulations that trend has reversed. At a Housing Insights Conference on November 7th, CMHC’s Regional Economist Ted Tsiakopoulos discussed with local realtors how we could expect this trend to continue. Tsiakopoulos pointed out that the median purchase price in our region is now hovering close to $400,000. At that price point, only entry-level detached homes fall into range.
The Bank of Canada raised the benchmark lending rate on October 24th to 1.75%; many analysts are projecting the central rate may be hiked two to three more times yet and possibly in quarterly succession depending on the strength of the economy and inflation. These types of rate hikes are projected to moderate demand in the real estate market over the next two years. CMHCs recent provincial outlook for the housing market cites rising rates should return price growth to more fundamental or historical averages.
Locally, we can continue to expect strong demand for our real estate market. Particularly, residential inventory continues to be depressed by about 1/3 compared to the historical average, meaning there aren’t enough homes for sale. Furthermore, our regional population is growing ahead of the provincial average, and we have very low unemployment rates. A return to more moderate growth as projected by CMHC will be welcome. As our region expands, it is essential to ensure it is done on a stable footing. Have questions about what your home is worth? Feel free to Contact Us or just fill in the form below.