The average sale price of properties sold in November increased by 18.7 per cent. Let’s look behind some statistics.
Statistics can be a little scary.
I had a few people pop up on my chat widget last week asking if it were true that prices for Kitchener-Waterloo real estate rose by almost 19% in November.
Every month our local real estate association produces statistics. Many Realtors, including myself look forward to seeing how the market is doing. We like to share this information online and with our clients. News outlets write headlines and do stories based on these monthly statistics.
Here are a couple of statistics from the report:
- “The average sale price of all residential properties sold in November increased by 18.7 per cent to $566,866 compared to November 2018.”
- “The median price of all residential properties sold last month increased 17.6 per cent.”
Great news if you own a home in Kitchener-Waterloo, right?
Bad news if you are hoping to buy a home in Waterloo Region, right?
Not so fast.
More (troubling) November statistics
Here are some more statistics from the report that have resulted in influencing and inflating our price statistics.
We sold 12.4% fewer units in November 2019 compared to November 2018. And of those units we sold, about the same amount were semi-detached family homes. But we sold 28.1% fewer condominiums, and 38.5% fewer townhouses.
Why is this important?
Because the average price of semi-detached homes is nearly double the amount of condominiums and 30% higher that that of townhouses. The relative increase in the number of single family homes compared to the number of cheaper condos and townhouses sold skews the average price and median price values upwards!
The data is correct but misleading!
Seller’s Market Statistics
Also in the data are these little nuggets of gold. This is more troubling.
- 27.9% fewer properties were listed in November 2019 compared to November 2018.
- The number of units available for sale is 34% lower than November 2018.
- The months supply of homes for sale (inventory) was only 1.1 months in November, which is 35.3% lower than November 2018. This means that if no new homes were listed for sale, it would only take about 33 days to sell everything we have in Kitchener-Waterloo!
A seller’s market defined
If there are 0-4 months of inventory, meaning that all current listings can expect sell within four months, it is considered a seller’s market because houses are selling very quickly. In a seller’s market, sellers have the advantage because demand for property exceeds supply.
A balanced market has 5-8 months of inventory and a buyer’s market has nine or more months of inventory.
Although the average and median price statistics are misleading due to the makeup of what was sold in November, our inventory levels are so low, prices in Kitchener-Waterloo have no where to go but up. If things don’t change in the new year, I think it is going to be a crazy 2020 spring market.
I read an interesting statistic last week. I’m generalizing and simplifying the stats:
Homes in Kitchener-Waterloo are worth 50% more than they were five years ago. Homes in Kitchener-Waterloo are worth 30% more than they were three years ago.
Also and finally
In the first week of the new year, I predict when our local real estate association releases the statistics for 2019, they will show an average price increase of 6-7%.
Stay tuned for that.
What’s the Kitchener-Waterloo Real Estate Market like?