Waterloo Region Real Estate Market Update
The real estate market in Waterloo Region remains subdued, with sales volume through the Multiple Listing Service® (MLS®) System down 22% compared to April 2022 and 18% below the previous 5-year average. Although half the number of new listings hit the market than this time last year, demand continues to outstrip supply, leading to an increase in prices on a month-over-month basis. Total residential sales included 404 detached, 119 townhouses, 95 condominium units, and 51 semi-detached homes. The average sale price for all residential properties was $797,716, a decrease of 11.9% compared to April 2022 but an increase of 2.6% compared to March 2023. The market remains a sellers’ market, with low inventory and the number of months of inventory historically low at 1.3 months. The average number of days to sell in April was 16, compared to 9 days in April 2022.
Home Price Growth Factors Studied
A report by the C.D. Howe Institute states that the soaring home prices in Canada are mainly due to existing barriers to construction in Canadian cities such as upfront development charges, scarcity of developable land, and the lack of transportation options to new sites. The report urges governments to pare down regulations governing new housing development projects and lower upfront costs that home buyers will have to shoulder. The report also suggests enacting mandated minimum targets for municipal residential construction and reforming upfront charges on new developments by changing them to utility-based user fees for services like water and wastewater once the infrastructure is in place.
The End of Variable Rate Mortgages
Canadian homeowners are increasingly opting for fixed-rate mortgages due to rising interest rates, according to Bank of Canada data. The share of new mortgage loans with variable interest rates has shrunk significantly in the past year, with just 11% of new loans in February 2022 being variable rate mortgages, compared to 55% in February 2021. The decline represents an 87% drop in the volume of variable rate loans, indicating that Canadians are seeking security and discounts offered by fixed-rate mortgages.
It Would Take 7 Months For a Single-Income Buyer to Save Enough for The Minimum Down Payment for a Home in Kitchener-Waterloo
A recent study by Zoocasa found that it would take more than a year for single-income buyers in Vancouver and Toronto to save for the minimum down payment on a benchmark apartment. In contrast, the five most affordable cities for single-income apartment buyers are located in the prairie provinces, with Edmonton deemed the most affordable, where it would take just 2.6 months to save for a minimum down payment. In Kitchener-Waterloo it would take 7 months. Nationally, it would take a single-income buyer 9.1 months of saving their entire after-tax salary to afford the minimum down payment on a benchmark apartment.