After drastic influxes in the market during the worst of the pandemic, the real estate market in Waterloo region is “going back into a more balanced state” mainly due to rising interest rates, says a local expert.
“I would regard it as balanced,” said Paul Anglin, a real estate professor at the University of Guelph. “It’s not favoring the sellers as was true a year ago.”
Interest rates on home loans have climbed this year due to six separate hikes from the Bank of Canada in an effort to combat rising inflation. It was as low as 0.25 per cent back in January, but it now sits at 3.75 per cent.
Although rising rates are the “dominant” factor in the recalibration of the market, Anglin also attributes this to the lack of clarity about where interest rates are going, and discussions of a possible recession.
What a balanced market looks like
Anglin said a widely used measure of a balanced market is the monthly ratio of sales to listings at the beginning of the month.
Paul Anglin, a real estate professor at the University of Guelph, believes that sellers don’t have the power that they used to. (Submitted by Paul Anglin )
“And the current number is not too far from normal,” he said.
Last month in Waterloo Region, there were 489 properties sold between single family homes, townhomes, condos and semi-detached properties, compared to 928 properties that were up for sale. A year ago it was virtually the other way around.
“The number that I often pay attention to is how many days does it take to sell a house and that has increased compared to a year ago,” he said.
Last month, a home sat on the market for an average of 22 days, more than double from a year ago. The last time we’ve seen this number was close to the start of the pandemic in May 2020.
“The days on market is not so rushed as in the past,” Anglin said. “With an average of about three weeks, there is enough time for buyers to compare alternatives without being so long as to make a seller too worried that they will not sell to any buyer.”
The sales price on average for a single family home in October of this year was about $860,500, which is down by about 27 per cent from the height of the market back in February.
Condos have seen a drop too but not as significant — last month the sales average was about $488,200, down 14.5 per cent from February.
Despite this, the sales price on average in October for single family properties and condos is much higher than pre-pandemic levels — they’re up about 145 per cent respectively from October 2019.
New home price declines more than the national average
In September, the prices of new homes fell by 0.1 per cent nationwide — it was the first drop since before the pandemic. However, Cambridge, Kitchener and Waterloo saw a more dramatic decrease of 0.6 per cent.
Megan Bell, president of the Waterloo Region Association of Realtors, attributes this to people moving to the region from the Greater Toronto Area (GTA) looking for an affordable option, and where they would qualify for a loan.
So many people came and that demand pushed the home prices up so they’re nearly the same as Toronto.
“I think we’re seeing some people either moving back because our prices were kind of on par with the GTA — or just a little bit under — the affordability really wasn’t there, so they might have to continue driving down [Highway 401] to continue to qualify,” Bell said.
Megan Bell, the president of the Waterloo Region Association of Realtors, thinks we’re heading toward a balanced market too, but thinks that sellers still hold the power. (Submitted by Megan Bell)
Another thing that contributed to the figure, according to Bell, is that people moved to the region during the pandemic since they were able to work from home. Prices were bumped up due to the influx and demand, but some have since left because they have to go back to the office in-person.
These things along with inflation and climbing interest rates bring the market to where it is today, Bell said.
She believes that “we’re heading toward a more balanced market” too, but thinks that it sways in favour of the sellers.
Statistics Canada, which released the 0.6 per cent figure, said in a statement that “builders cited bad market conditions as the reason for price decreases.”
Advice for buyers and sellers
in the meantime, Anglin offers advice to both buyers and sellers:
“For now, buyers and sellers have to make their best decision given the available information,” he said. “So, my advice for buyers is the same that it has been for a while: Buy a house that you would be happy living in, even if the price were to fall.”
“For sellers, there is always the possibility of regret but, again, if you like where you live now, then enjoy living there. In both cases, you need to accept the risk, since life offers few guarantees.”
TORONTO – One expert predicts Ottawa‘s changes to mortgage rules will help spur demand among potential homebuyers but says policies aimed at driving new supply are needed to address the “core issues” facing the market.
The federal government’s changes, set to come into force mid-December, include a higher price cap for insured mortgages to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
CIBC Capital Markets deputy chief economist Benjamin Tal calls it a “significant” move likely to accelerate the recovery of the housing market, a process already underway as interest rates have begun to fall.
However, he says in a note that policymakers should aim to “prevent that from becoming too much of a good thing” through policies geared toward the supply side.
Tal says the main issue is the lack of supply available to respond to Canada’s rapidly increasing population, particularly in major cities.
This report by The Canadian Press was first published Sept. 17,2024.
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
