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Kitchener-Waterloo real estate prices fell slightly in March – Global News

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For the first time in six months, the Kitchener-Waterloo Association of Realtors reported a decrease in the average cost of buying a home.

“The skyrocketing prices of the last two months took a bit of a breather in March, with the overall average price dipping five per cent compared to what we saw in February,” said KWAR president Megan Bell.

Read more:

Average home price in Kitchener-Waterloo surpasses $1-milllion mark: KWAR

“While it is too soon to draw conclusions from just one month of home sales, I know many will be comforted to see a levelling off on the average price, no matter how incremental.”

The realtors say the average sale price of a home in March fell to $960,181 from a record high of $1,007,109 in February. This represents a decrease of about 5.6 per cent.

This number is still a slight tick above January, when KWAR reported the number to be $955,665.

Detached homes continue to sell at well above the million-dollar mark as the average price last month came in at $1,132,637.

While this is still a dizzying number for many Kitchener residents, it represents a 6.4 per cent decrease from February when that number was reported to be $1,214,067.

Some 725 homes changed hands across the area last month, which is a decrease of 25 per cent from a year earlier, when a record was established for monthly home sales across the region.

The previous 10-year average for home sales in March in the area is 599.

Bell said that realtors are starting to see signs that the market may be cooling somewhat.

“As the province feels its way out of the pandemic, we are beginning to see some very preliminary signs of a potential cooling,” she said.

“We are not seeing quite as many multiple offers and some offers are coming in with conditions. Of course, when we say cooling, we’re talking about a market that has been scorching hot which is why we are pleased to see this happening.”

© 2022 Global News, a division of Corus Entertainment Inc.

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The priced-out home buyer's guide to falling real estate prices and rising mortgage rates – The Globe and Mail

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Houses for sale in a new subdivision in Airdrie, Alta., on Jan. 28.Jeff McIntosh/The Canadian Press

No offence to the build-more-houses crowd, but the quickest path to more affordable housing is lower prices.

Correction: Much lower prices. As mortgage rates rise, affordability can worsen even as prices fall.

The real estate boom of the past two years created an affordability crisis for young adults who aspire to own a house. With housing markets on the decline in spring 2022, it’s an ideal time to look into the near-term feasibility of houses becoming more affordable.

The wildcard here is mortgage rates. They’re the big decider now in affordability, not prices.

Several national mortgage brokerage companies offered a 4.19-per-cent five-year fixed rate mortgage as of early this week, roughly double the level of last fall. We’ve seen high-velocity mortgage rate changes before in recent decades, but on the down side. Further rate increases are possible.

House prices are on the decline, but only just recently. The average national resale price in April was up 7.4 per cent to $746,146 on a year-over-year basis, but down 6.2 per cent from March. In Toronto, the average April price of $1,254,436 was up 15 per cent year over year and down 3.5 per cent from March.

To understand the interplay of changes in prices and rates, consider a home bought in February at the national average price of $816,720. Mortgage rates were cheaper back then, so let’s plug in a five-year fixed rate at 2.5 per cent that gives us a monthly payment of $3,395 based on a 10-per-cent down payment and 25-year amortization.

Now, for a comparison using today’s 4.19-per-cent five-year fixed mortgage rate and the April average price of $746,146. This combination of lower prices and higher borrowing costs would give you a monthly payment of $3,714, which means an extra $319 a month compared to February.

Imagine that mortgage rates plateau for a while, but prices fall another 10 per cent or so in the months ahead to $671,500. With the same 4.19-per-cent mortgage rate offered today, the monthly payment works out to $3,342. We’re now $53 a month cheaper than February, which is a start on improving affordability.

Upward pressure on mortgage rates has eased for now, but further increases could happen in the months ahead. A rise to 4.5 per cent for a five-year fixed rate mortgage would push up payments on a house priced at $671,500 to $3,449. Goodbye, affordability gains.

Might further price declines help? The experience of the past 40 years in real estate suggests you not get your hopes up.

There have been seven annual price drops on an average national basis since 1981, data from the Canadian Real Estate Association show. The range of declines was 0.5 per cent to almost 5 per cent, with an average of 2.7 per cent. As older boomers and seniors will remember, there was a monster decline in Toronto in the 1990s with a peak to valley annual price drop of 23 per cent over six years.

The Toronto example seems more relevant today, given that it resulted from an intense level of speculation in residential real estate. The build-more-houses people argue we have a supply problem in housing today, but demand from people buying homes as an investment is a major cause of today’s unaffordability problem.

Rising rates hurt the investment appeal of owning a house to flip or rent out. If investors step back from the market, then there’s less competition to buy homes, which will reduce upward pressure on prices. This may explain why housing is a lot calmer now, with fewer buyers competing for homes on sale.

Relief from bidding wars in itself is a victory for affordability in that you have predictability on the price of getting a deal done. But real progress on affordability will only come from lower down payments and monthly mortgage costs.

Down payment costs are falling – the amount needed for a 10-per-cent down payment fell more than $7,000 from February to April based on national average resale prices. But monthly mortgage payments are higher.

Building more houses won’t get those payments down in the near term, which means you’ll need a serious price decline that more than offsets mortgage rate increases. Average prices are up more than 50 per cent in the past two years, so it’s not out of the question.

Are you a young Canadian with money on your mind? To set yourself up for success and steer clear of costly mistakes, listen to our award-winning Stress Test podcast.

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This is what $1-million will get you in real estate markets across Ontario – CTV News Toronto

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Both the Canadian and Ontarian real estate markets saw a record-breaking first quarter in 2022, with housing prices reaching new heights and sellers remaining well-positioned.

As of March, the average price of an Ontario home was $1,052,920. In the Greater Toronto Area, the average price is sitting at $1,269,900.

The Greater Toronto Area isn’t the only area breaking real estate records in the first quarter of the year either — prices of detached homes in the four Golden Horsehsoe communities — Barrie, Cambridge, Kitchener-Waterloo and Oshawa  — all surpassed $1 million for the first time.

The rise in prices is indicative of a larger national trend. Since last year, the national average home price climbed by more than 20 per cent to hit a record $816,720 in February.

With so many price tags hovering around the $1-million mark, buyers might be wondering how far a budget of that amount could get them across Ontario’s real estate markets.

Well, it depends on where you’re looking.

Here are a selection of Ontario real estate listings for under $1 million.

TORONTO

117 North Bonnington Ave can be seen above. (RE/MAX)

Address: 117 North Bonnington Avenue, Toronto, ON.

Property type: Townhouse

Asking price: $999,900

Bedrooms: Three

Bathrooms: Two

KITCHENER

22 – 93 Gage Ave can be seen above. (RE/MAX)

Address: 22 – 93 Gage Avenue, Kitchener, ON.

Property type: Condo

Asking price: $829,000

Bedrooms: Three

Bathrooms: Three

WINDSOR

533 Mountbatten Crescent can be seen above. (RE/MAX)

Address: 533 Mountbatten Crescent, Windsor, ON.

Property type: Detached home

Asking price: $999,900

Bedrooms: Four

Bathrooms: Three

NORTH BAY

59 Janey Avenue can be seen above. (RE/MAX)

Address: 59 Janey Avenue, North Bay, ON.

Property type: Detached home

Asking price: $779,900

Bedrooms: Five

Bathrooms: Three

OTTAWA

711 Spring Valley Drive can be seen. (Google Maps)

Address: 711 Spring Valley Drive, Ottawa, ON.

Property type: Detached home

Asking price: $999,900

Bedrooms: Four

Bathrooms: Three

NIAGARA-ON-THE-LAKE

23 Windsor Circle can be seen above. (RE/MAX)

Address: 23 Windsor Circle, Niagara-On-The-Lake, ON.

Property type: Townhouse

Asking price: $999,900

Bedrooms: Four

Bathrooms: Four

THUNDER BAY

2316 Falconcrest DrIve can be seen above. (RE/MAX)

Address: 2316 Falconcrest Drive, Thunder Bay, ON.

Property type: Detached home

Asking price: $969,000

Bedrooms: Four

Bathrooms: Four

HEARST

908 Halle Street can be seen above. (RE/MAX)

Address: 908 Halle Street, Hearst, ON.

Property type: Detached home

Asking price: $750,000

Bedrooms: Four

Bathrooms: Two

LONDON

1177 Crumlin Sideroad can be seen above. (RE/MAX)

Address: 1177 Crumlin Side Road, London, ON.

Property type: Detached home

Asking price: $999,000

Bedrooms: Five

Bathroom: Three

BARRIE

207 Dunsmore Lane can be seen above. (RE/MAX)

Address: 207 Dunsmore Lane, Barrie, ON.

Property type: Detached home

Asking price: $999,000

Bedrooms: Six

Bathrooms: Four

With files from CP24’s Chris Fox. 

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Prime Retail Real Estate Is Hot And Retailers Will Pay More For It – Forbes

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As if retailers don’t have enough challenges with ongoing supply chain issues, recruiting and retaining staff and shoppers spooked by rising prices, now they have another worry. Prime retail real estate is in high demand and rental rates are rising accordingly.

That’s good news for REITs and other retail real estate owners and property managers but bad news for retailers that have to work rising real estate prices onto their balance sheets. It’s the simple economic law of supply and demand.

Retailers are opening new stores far faster than they are closing them, creating a fierce fight for the best spaces. At the end of 2021, the National Retail Federation reported that major U.S.-headquartered retailers announced more than 8,100 new store openings, more than double the 3,950 closings planned.

Through January 2022, a month popular for retailers to announce their opening and closing plans, the gap between the number of openings and closings is even wider – 1,190 openings to 742 closings, according to Coresight Research.

Simon Property Group, the largest U.S. mall property owner, just reported its occupancy rates reached 93.3% at the end of March, up from 90.9% last year.

In the earnings call, CEO David Simon said it had signed more than 900 leases for over three million square feet in the quarter and added there was a “significant number of leases in our pipeline.” Given its positive outlook, SPG also raised its previous guidance.

Demand exceeds supply

Real estate investment firm JLL Capital Markets has just completed a study of the trending retail real estate markets and I sat down with Danny Finkle, retail co-leader in JLL’s capital markets and co-head of its Miami office, to discuss the findings.

“Retail follows consumers, rent growth follows both, and investors follow all three,” he said. “It all comes down to diminishing supply with a consistent and growing demand from the user in the retail space.”

Reducing supply is a low level of new retail development which is not likely to turn around soon due to the rising cost of construction and building materials. Adding another complication is the large amount of existing square footage in malls, open-air retail centers, and other spaces that have been repurposed for alternative uses.

Driving increased demand for space is retailers’ recognition that even with a strong e-commerce presence, they need to maintain an equally strong brick-and-mortar presence. So even established retailers that may have reduced their existing retail fleet are starting to open new stores again.

And digitally-native B2C retailers are now making tracks to physical retail which is creating even greater competition for prime retail space.

Reducing supply is the overall low level of new retail development which is not likely to turn around soon with the cost of construction and building materials going through the roof. Adding further complication is the amount of existing square footage in malls, open-air retail centers, and others repurposed for alternative uses.

Where it’s hot

Eight markets top the list in growth potential, according to JLL’s analysis:

· Nashville, showing over 60% growth in rental rates since 2011;

· South Florida, up nearly 50%;

· Austin and Tampa both at 39%;

· Denver at 37%; and

· Charlotte, Dallas-Fort Worth and Raleigh-Durham around 30%.

Among major cities, Chicago is an outlier with net absorption rates significantly higher than number two Washington, DC, followed in order by Boston, Philadelphia, Los Angeles, San Francisco and New York City trailing the pack.

“Retailers need to be where the people are and while workers will eventually return to downtown urban areas, right now we have to pay attention to where people are moving, as well as working,” he shared.

Where it’s not

A recent analysis of Census data conducted by Brookings Institute showed an “outsized” decline in the size of the nation’s 56 major metropolitan areas (defined as exceeding one million residents). People are moving to smaller metro areas in droves with even stronger growth to non-metropolitan areas.

The biggest losers were New York, Los Angeles, San Francisco and Chicago in 2021 and Boston, Miami, Washington, DC, Seattle, Minneapolis-Saint Paul and Philadelphia all went from growth in the 2019-2020 period to a decline in 2020-2021.

Retailers will need to keep their ear close to the ground as to how the trend in work-from-home, either full-time or increasingly part-time, changes the traffic patterns in the nation’s downtowns. They also may be able to grab attractive urban retail spaces on the cheap in the meantime.

As for retailers looking to secure suburban retail spaces, Finkle says the market will remain very competitive.

“If you look at the amount of new retail development, it is a minuscule percentage, at a 50-year low. And the prospect for new development on a go-forward basis is also remarkably low. It’s hard to believe that anyone is going to build a new enclosed mall in the near future.

“But people still want to get out and shop and retailers need to be there for them,” he concluded.

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