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Kitchener-Waterloo Real Estate Market Report February 2018

 

 

Overview

 

Greetings! Welcome to the WRX Property Group website and blog. With the first month of 2018 receding into the rear view mirror, and February well upon us, it’s time again for our Monthly Market Report. There are two things to make note of right off the bat, each of which is having an impact on the month’s statistics. The first is the Non-Resident Speculation Tax, which applies a 15 percent tax to residential purchases in the Greater Golden Horseshoe Region by non-permanent residents and/or non-Canadian citizens. The tax was introduced just under a year ago, and its overall impact is still being revealed. Although Kitchener-Waterloo residents don’t need to worry about it personally, it is affecting the market overall. The second factor, and in many ways the more major one, is the new mortgage stress test rules, which took effect on January 1st, 2018. With the stress test, banks will assess potential borrowers on whether they could continue to make mortgage payments at a 2 percent higher interest rate than what they’re applying for. Previously, these stress tests were reserved for uninsured borrowers and those with a less than 20 percent down payment, but it will now apply to everyone. This means fewer people will qualify for mortgages, and approved mortgages will potentially be lower amounts overall. You can read all about the changes to mortgage rules in 2018 (as well as how the new rules differ from the old ones) in our article here. Bearing those factors in mind, though, let’s proceed.

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Sales by Type of Home

 

January 2018’s residential sales in Kitchener-Waterloo and the surrounding area (not Cambridge) consisted of 149 detached homes, down 23.6 percent from 2017; 70 assorted condominium units (e.g. everything from town homes to apartments), down 11.4 percent from 2017; 27 semi-detached homes, down 18.2 percent from 2017; and 22 freehold townhouses, up 10 percent from 2017 (just to clarify, a freehold townhouse means you own the home and the plot of land, whereas in a condominium townhouse you just own the interior). In terms of sale prices, the overall average for Kitchener-Waterloo and the surrounding area was $458,750 (up 9 percent from January 2017). Detached homes averaged $554,857 (up 10.7 percent from 2017), apartment condominiums averaged $246,821 (up 4 percent), townhouses averaged $371,095 (up 14.5 percent), and semi-detached homes averaged $388,974 (up 9.7 percent). As you can see, overall sales totals went down, but overall prices went up – we’ll discuss this more later, but it is in line with the new mortgage rules taking effect. That said, let’s move onto specific numbers for Kitchener-Waterloo.

 

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Waterloo East

 

Waterloo East saw a total of 36 homes sold in January 2018, which is down slightly from December 2017’s total of 42. Interestingly, the average sale price climbed to $416,572 in January (up from December’s $399,550), but the price per square foot went down to $278 from December’s $306. The average days to sell climbed to 45, up from 22.

 


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Waterloo West

 

Waterloo West had over a dozen more homes sold than the East, coming in at 49 for the month of January. Again, this is down from December’s number, which saw 66 homes sold. There was a slight drop in average sale price and price per square foot ($444,810 and $300, respectively), but there is one factor in which Waterloo West’s performance in January did improve from December’s. The average days to sell dropped to 35 in January from 42 – a week less time on the market, on average.

 

 

Kitchener East

 

Kitchener East saw increases across the board from December’s numbers. There were 37 homes sold in January, versus 33 in December. More significantly, the average sale price in January climbed to $450,545 up from $380,039 in December. The price per square foot climbed to $339 from $321, and the average days required to sell rose to 31 from 25 in December.

 

 

Kitchener West

 

Kitchener West, as usual, is a very hot market. Though sales in January dropped from December’s total (113 in January versus 133 in December), it remains by a significant margin the most active quadrant in terms of Kitchener-Waterloo real estate. The average sale price rose to $437,001 from December’s average of $399,907, with the average price per square foot also rising to $306 from $290. Finally, the average days to sell was the lowest in Kitchener-Waterloo at 24; this is also an improvement over Kitchener West’s December average, which was 30 days.

 

 

Overall

 

The overall total for homes sold in Kitchener-Waterloo in January 2018 came in at 233. The average sale price was $437,632, at an average price per square foot of $306. The overall average days to sell in Kitchener-Waterloo was 31.

 

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Wrapping Up

 

So what can we make of these numbers? For one thing, yes, January’s sales numbers are lower than those of January 2017 and January 2016. But if you look further back throughout the years, setting aside 2016 and 2017 as unusually active, Kitchener-Waterloo’s real estate performance is very much in line with Januarys past, in terms of sales. The overall average of homes sold in January in Kitchener-Waterloo over the past ten years is 248.5, making 2018’s total of 233 very much in line with January trends (it’s also worth noting that the total average is somewhat inflated by unusually large numbers of sales in 2010, 2016, and 2017). What does stand out, however, is that there is an overall shortage of listings. This means that many homes will receive multiple offers, which has a tendency to increase sale prices. As such, January 2018’s average sale price of $437,492 is the highest over the past 10 years by around $30,000. Again, though, it’s worth noting that there are other factors contributing to this rise, including natural monetary inflation (indeed, the average sale price for homes in Kitchener-Waterloo has increased every year except 2013, which saw a very slight drop).

 

As always, we’ll continue to monitor the real estate situation in Kitchener-Waterloo closely and keep you up to date and informed. And finally, if you’ve got any further questions, or you’re interested in a particular area (whether for buying, selling, or just general information), please don’t hesitate to contact us – we’re always happy to help.

 

Written by Will Kummer

 

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