In a nutshell
An acute shortage of inventory of homes for sale will be biggest market impactor in the Kitchener-Waterloo real estate market in 2021. Supply is going to remain low, driving up prices throughout the year.
The Canadian real estate market
Across the country, (with a few notable exceptions), the Canadian real estate market is hot. After a relatively sluggish year in 2019, where average home prices increased 2.4% at a national level, 2020 is on track to increase 13.1% this year.
The prediction for next year, 2021 is an average sale price of $620,404, up 9.1% from this year.
The Ontario real estate market
In Ontario, the Canadian Real Estate Association (CREA) forecasts the average sale price of $823,656 in 2021, up an astounding 16.3% from 2020 levels. And that is on the heals of this year’s increase of 17.1%. In Ontario, 2020 is expected to finish with an average price of $708,377. In 2019, prices increased 6.3%. That adds up to a lot of gains in three years.
And these provincial gains are not driven by the Toronto market. Southern Ontario real estate prices, outside of Toronto, have been responsible for most of the price gains.
The Kitchener Waterloo real estate market
The 2020 statistics aren’t released yet for Kitchener-Waterloo real estate market, but I think were have likely seen price gains of 16% or more this year. We’ll know in a couple of weeks where we ended up.
I’ve been making real estate forecasts for the Kitchener-Waterloo real estate market for many, many years. The reasons for our astonishing growth are well known. We have both the factors impacting the real estate market on the national level impacting us here as well as factors unique to our market.
I’m typically conservative in my estimates of Kitchener-Waterloo home prices. However, based on our current market I do not think it is unreasonable to forecast an increase of at least 14% in 2021. I am of course predicting a continuing Seller’s Market. Kitchener-Waterloo is one of the hottest housing markets in Ontario.
2020 compared with 2017
From this Realtor’s point of view, there turned out to be a lot of similarities to the 2020 real estate market and that of 2017. Bidding wars, rising prices and short days on market were all results in both years of inventory shortages. However, I feel that much of the market was driven by speculation in 2017, whereas the dominant drivers in 2020 was not investors but first time homebuyers, and the move-up, move over markets.
Back in May of 2017, I wrote this post:
Many of the points still hold true. Real estate investors, population growth, immigration, Gen Xers, job and income growth, proximity to the GTA, the move-up market, the move over market, first time home buyers, tech, two universities and a college, relatively inexpensive real estate, insurance business, inventory shortage, FOMO, burgeoning condo market, LRT, GoTrain, mortgage interest rates, strong rental market (bucking the national trend with this one), pent-up demand, supply constraints, intensification, lagging new construction, working from home, Coronavirus, vaccine roll out, relocations, renovations and improvements… the reasons are many.
How’s the market?
Since 2017, when the market first went a little crazy, I’ve been keeping a spreadsheet for my buyer clients of all homes that come up in their search criteria and other homes that they identify as having interest in. In January of 2020, I decided to start publishing a monthly report on one of my YouTube Channels sharing this information with anyone who was interested in tracking things. Little did I know then that it would be such an interesting year.
The problem with real estate reporting is that it is always looking backward. Even in this information age, we have few resources to give us a real time look at what is going on now, (not four or seven weeks ago). If you are interested in tracking the market in real time, subscribe to my youtube channel and stay weeks ahead of the competition.
What’s happening with…
Someone popped up on my chat widget one day with a question about a condo building she was interested in. (I try to keep office hours M-F 9am-1pm and when I’m in my office, I have my chat widget open for anonymous questions from the public and Realtor colleagues).
Anyway, just like your teacher used to say when you were in school, if one person has a question, it’s likely that half the class is thinking the same thing. So I started another series called. What’s happening with.
If you are interested in a certain section of the market (I.e.: 3 bedroom freehold townhouses, century homes in core neighbourhoods) send me a note.
Conclusion and call to action:
Just like nobody expects the Spanish Inquisition, we never really know what lies ahead. It used to be that buying a home was easy and selling difficult. But that’s all changed. Luckily, I’m here to help. Here’s my call to action. Take action. Contact me now.
Kitchener-Waterloo Real Estate News
Since January 2010, Keith Marshall’s real estate blog