While the real estate market has been extremely “hot”, it apparently isn’t doing much to warm up the weather outside. I hope you’ve been doing well and keeping safe during this winter madness!
In January 2021 we saw 310 residential properties sell, compared to 314 in December of 2020, and 240 in January of 2020. Typically both December and January are “slow” months for real estate in Kitchener-Waterloo. This is mainly due to the holiday season, and then the post-holiday recovery.
However, this year we have seen an increase in sales during both of those months. One of the reasons is due to the COVID restrictions. With folks not being allowed to visit families and friends over the holidays they have had a lot more time to continue shopping for homes. Another reason is the increased demand in the region. With our population continuing to grow, and the region adding more and more tech jobs, we are going to see a continued increase in demand and sales.
With spring around the corner, and the COVID restrictions in the region loosening up, I expect that this trend will continue into the typically busy spring market as the snow melts and we shed our winter coats. If the early start to the year has been any indication of what’s to come, the spring market is going to be one for the ages!
So does this mean prices are going up?
At the time of writing this there are only 190 properties available for sale in Kitchener-Waterloo across ALL property types, and only 92 freehold detached homes. Given that there were 310 properties sold in January, and there are only 190 available for sale right now, I would say we have a serious supply problem. If no new homes came on the market, Kitchener-Waterloo would be sold out in less than 1 month. That is a serious supply and demand recipe for a jump in prices. Combine it with the historically low interest rates, and yes price will go up- A LOT!
How much have the prices gone up?
The average sale price across all residential properties in January 2021 was $666,325 which is a year-over-year increase of 22.88% compared to the January 2020 average of $542,256, and a 7.6% increase compared to December 2020 ($619,068). The average sale price for detached homes in January 2021 was a staggering $830,402. Up 26.7% compared to $655,423 in January 2020. Prices are up, and they are up significantly compared to last year! As mentioned earlier this is due to the supply and demand factors, and an increase in demand due to lower interest rates (among other increases to demand in the region).
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The average number of days to sell in January 2021 was 22, compared to 33 in January 2020. So once again, homes are selling fast, and the main driving force is the increase in demand and the persistent low supply of homes.
Below is a chart representing average sale prices of detached homes in KW:
As you can see the prices continue to be on an upward trend, and we expect this to continue throughout the rest of the year barring some unforeseen circumstances.
Taking a look at semi-detached homes:
Very similar to what we saw with detached properties. Sloping upwards and indicating a price increase trend.
Taking a look at townhomes:
Townhomes are also showing an upward trend, indicating prices are increasing.
Condo apartments are a bit more difficult to represent in a single graph, for a wide variety of reasons, and they could have their own market report dedicated with the amount of content required. For illustration purposes the above graph is showing the sale price of 1-bedroom condos. Condos have danced around on the charts but are starting to show a positive upward trend in recent months.
Part of the reason condos are difficult to represent on a graph is due to so many small factors which play a role. For example condos range from 1-3 bedrooms which greatly affects the sale price, and if one month there are more sales of one than the other it will skew the graph. Another factor in condo prices are condo fees. A 1-bedroom condo with a $500 condo fee will sell for a lot less than the same condo with a $300 condo fee. This makes it difficult to assess the accuracy/representation of any single month. If you have questions about a specific condo building please feel free to reach out and I will be happy to provide further details.
Wrapping it up:
I’m sounding like a broken record at this point, but as we can see from all of the details above, the KW market is in high demand and appears to have a continuing upward trajectory in terms of prices. As has been the story for the last year we are plagued by low inventory for homes, meaning we are in desperate need of homes for sale. Between the inventory levels, low interest rates, and increasing demand, I expect prices will continue to see gains throughout the near future and likely the rest of 2021.
While this is great news for the local market sellers, it’s still important to proceed with caution. Practice safe social distancing, wear face covers as much as possible, and avoid unnecessary trips by taking advantage of virtual tours only visiting homes which are very likely to work for you.
For potential buyers this type of market can be very difficult to navigate, and it’s rather disheartening when it comes to offering on properties. We are once again seeing homes get 20-30 offers, and this means there are up to 29 disappointed buyers each time around. Acting quickly and having all of the necessary arrangements in advance will help your chances, but persistence will also be a determining factor. It can be difficult to continue when you’ve lost 4-5 properties in a row, but having the right team behind you will eventually result in success!
If you are curious about your home’s value you can check out our instant home evaluation tool by clicking here.