What will the Spring thaw bring?
Tightening rates and an increased housing supply (that’s not a bad thing…)
Waterloo Region’s two-year run on housing prices has homeowners and prospective owners wondering, how long can this go on for? There may be signs of market change on the horizon.
The pandemic has placed added priority on homeownership and living space. After 2 years of public health regulations requiring us to live and work from home, Canadians have really valued residential space (detached homes have seen the largest price gains in the last 12 months in KW). Canadians have also enjoyed access to increased savings and historically ultra-cheap credit thereby increasing the purchasing power of the average buyer. Finally, there has been an ongoing exodus out of the Greater Toronto Area by buyers in search of affordability. But some people are talking about a post-COVID-19 world and interest rate hikes are coming.
So what’s next for Kitchener-Waterloo?
In April 2017, detached home prices were up 40.1% year over, local brokerages also noted migration from Toronto buyers was becoming common. It’s a good period to compare without the present-day pandemic influence. It’s also important to note, in 2017, credit rates were considered to be very low (although rates are substantially lower now). The government and central bank began to implement a number of responses in an effort to maintain housing affordability. Perhaps the most effective was the raising of interest rates. Over the period of 2018 and 2019 the central bank raised interest rates 5 times. Locally, our market saw a correspondence in a higher volume of listings with an overall lower volume of transactions, basically the reverse of what we are experiencing today.
The graph below shows the number of homes for sale over a five-year period in Kitchener-Waterloo. There were nearly twice as many homes for sale through 2018 and 2019, we can also see that each spring there is a surge of listings to greet the warmer weather. The spring of 2022 is likely to be no different, except Buyers will be dealing with higher interest rates, more homes to choose from and perhaps a more ideal climate with which to make a purchase. Listing supply tends to increase with interest rate hikes and warmer weather. Waiting for the warmer weather to sell may not be the best choice this year.
Homes For Sale Over A 5 Year Period In Kitchener Waterloo’s Residntial Real Estate Market *as per KWAR MLS statistics.
