Market Update: Early Winter 2024 - Waterloo Region

Seasonal Market Trends Re-establishing:

As we refer back to each of our brokerage reports over the past two and a half years, the common theme has been the impact of increased interest rates curbing real estate volume and activity. This reduction in sales activity has allowed for some normalization to return to our local real estate market, whether through increased inventory and more balance in negotiating power between Sellers and Buyers or the re-emergence of seasonal market trends, as we see in the chart below.

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Traditionally, the spring market is the most active in Southern Ontario residential real estate. The snow has melted, people are eager to make plans for the summer, and homes can be examined more closely during longer daylight hours. During Covid, we saw disruptions to this natural trendline, with the Fall of 2021 and the first two months of 2022 being some of the most active real estate months on record in our Region, while in 2023 and 2024, the seasonal peaks returned to spring markets.

Interest Rates:

The cost of borrowing continues to be the story for residential real estate, but it is directly tied to its counterpart, the cost of acquisition (or affordability). Real estate values did decline following the peak of 2022 but have primarily stabilized, averaging between 730,000-780,000 for the median sales price over the last year. 

For many Buyers, affordability is still a concern and rates remain elevated compared to averages over the last decade (although below the long-term average of 4.48%). Many Sellers were optimistic of a market resurgence with the beginning of the Bank of Canada’s easing of interest rates. Although sales volume has increased modestly year over year for the fall of 2024, it is more akin to a gradual warming.

Buyers:

The Bank of Canada continues to suggest that the easing of the central interest rate should continue into 2025. If the “soft landing” economists continue to call for does materialize and economic growth begins to accelerate in Canada, housing prices may begin to creak forward at a more traditional rate of appreciation. This means there could be considerably more Buyers looking (and competing) for property in the soft-landing scenario by springtime. In the GTA market, November sales activity was already up 40% year over year from 2023. 

Take advantage of the traditionally slower months of December and January and scoop your real estate prize property. Buyers can expect favourable negotiations currently in the Waterloo Region. Conditional offers are common again, including: Sale of Buyers Property, Home Inspection, and the often important Financing condition. 

Sellers:

The strongest segment of the residential market continues to be single-detached homes. Furthermore, we are at provincial record lows for producing new single-family detached property. These properties have been the most resilient at holding onto value gains from the Covid surge. However, given the reduced sales activity produced by higher interest rates and affordability concerns, Sellers can no longer assume their house will continue to be worth more tomorrow. In fact, we’ve essentially been in a value-holding pattern. Those Sellers who wish to sell their home in the current market will need to be realistic and focus on the correct valuation and presentation of the property. There are more homes to choose from, and Buyers sense that time is currently on their side. Be prepared to work with conditional offers and for active negotiations.

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