WATERLOO REGION — Residential real estate provided a solid return on investment in 2019 in Kitchener and Waterloo, with average prices climbing 9.3 per cent.
Sales volume only increased slightly, with 5,925 transactions representing a 1.6 per cent increase over 2018, according to the Kitchener-Waterloo Association of Realtors. That’s 3 per cent above the previous 10-year average, but 2.3 per cent below the past five-year average, accounting for the overheated markets of 2016 and 2017.
December sales slipped 9 per cent compared to 2018, with 244 sales.
“Overall, it was a steadfast pace of home sales in 2019,” new association president Colleen Koehler said in a release. “When annual home sales in Kitchener-Waterloo hit near 6000 transactions, I consider it to be a strong real estate market.”
The average price for all residential properties sold last year climbed to $527,718. Detached homes were up 7.1 per cent to an average of $614,743. The median price of all properties rose 10.1 per cent to $490,000, while the median price of a detached home increased to $570,000, a jump of 8.6 per cent.
“In 2019, the lack of supply continued to be a hurdle for anyone who was trying to buy their first home, move-up from their current residence, or downsize. This ongoing state of the market caused further escalation of home prices in 2019,” Koehler said.
“With interest rates expected to stay low in the year ahead combined with Waterloo region’s ongoing growth, I expect 2020 will see more price gains alongside a steady increase in sales.”
Inventory remained well below average levels throughout the year, with the number of months of inventory averaging 1.5 for the year. That’s a measure of how long it would take to sell existing inventory at the current pace.
Historical norms for the region are in the three to four-month range. The highest level reached last year came in May, with 2.1 months of supply, dropping to a year-end low of just 0.7 months.
The only category of homes to see an increase in sales last year was detached homes — 3,590 sales represented a 5.9 per cent increase over 2018. All other categories declined. Sales of condominium units were down 7.8 per cent (648 sales), townhomes dropped 3.7 per cent (1,266 sales), and semi-detached homes declined 0.7 per cent (421 sales).
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The national average selling price was C$713,500 ($569,161) in December, up 17.7% from a year earlier, the industry group said.
($1 = 1.2536 Canadian dollars)
(Reporting by Julie Gordon in Ottawa)
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Who’s Minding the Store?
We’re seeing it more and more now at AgingParents.com: elders as landlords who can’t do the management job any longer. Sometimes it’s the adult children who bring the issue to our attention. They see Dad failing maintain those rental houses he has had for decades. If tenants complain, he does not do anything. They see Mom fail to collect rents from her commercial enterprise, a small shopping center. They realize that rentable spaces are vacant and have been for some time. No effort to lease them is underway. The kids are alarmed. It may be a single rental home, a commercial building, a vast portfolio or anything the elder owns. Cognitive decline was not anticipated. No one was paying attention and things go wrong.
Financially successful people often invest in real estate, but for those who manage the properties themselves, we see a lack of planning about how to ease out of the management role. The same problem can occur when a property owner has a long time management company which is not held accountable for its work due to the cognitive impairment of the owner. Again, no one is watching management. It is a perfect opportunity for theft from the owner.
Real Life Examples
In one case a wealthy man owned a rental apartment next to his house. The long time tenant took ruthless advantage of the 85 year old owner and simply stopped paying rent. He lived for free and manipulated the owner into thinking the tenant was giving him help in exchange for use of the apartment when no such exchange actually took place.
In another case the 87 year old owner of an office building with long-term tenants in it did not take steps to terminate a very problematic tenant who had been there for 20 years. The landlord hated her but failed to exercise his rights to simply not renew her lease. Instead he waited for her to give notice that she was going to vacate. He had another person interested in the space, willing to lease it but he seemed confused about what to do to secure that new lease. He managed the property by himself.
Both of those elders who were landlords had adult children who could have stepped up. In the first matter, the rental apartment, the elder resisted the son’s attempts to intervene. The elder did have dementia but functioned rather well in other things. He angrily fought his son’s attempts to take over his financial affairs. He had previously appointed his son to do this very thing. The freeloading tenant manipulated the elder into signing an agreement to give the tenant free rent for five years.
In the office building matter, the daughter of the 87 year old was clearly not close to her father and was not paying attention to his confusion. She may have been stopped from getting involved by her father, who was stubborn and unwilling to admit that he was having trouble with managing the investment. In both cases, the only way to prevent abuse and manipulation was for someone appointed earlier to step in and assume responsibility for property management. That works smoothly when the elder is cooperative. It creates a legal mess when the elder resists.
Cognitive Decline and Money Management
Research tells us that even in the earliest stages of dementia or other cognitive impairment, financial judgment is impaired. It is, in a way, the first ability to decline and it is hard to see at first. The older person with impairment for financial judgment can carry on a normal conversation, sound and look okay. But if you asked them about the bookkeeping or accounting, they likely can’t keep it straight. Decline is subtle at the beginning and gets worse over time. Something is amiss before any family member may notice it. Sometimes this leads to loss of value in the property as well as lost income.
What family members can do is to be aware that as a person ages, their sharpness for financial management of property (and other matters too) can slide downhill. If you are aware of aging parents’ real estate investments, it is helpful to educate yourself about them, and to offer to help “in case of any emergency”. Ask your aging parent to teach you about them, even if you know plenty already. This approach can appeal to one’s ego: asking for advice. Do this before you see any sign of a problem and you are likely to be successful in preventing loss of income and value of any real estate they own.
If you simply assume that if Mom or Dad has been managing the family real estate investments for decades and it’s all just fine, you are taking too much chance that it will stay fine. Aging takes its toll. Most of us need some sort of help as we age, especially as we reach 85. By that time, one in three people will have Alzheimer’s disease. If you don’t like those odds, make your best effort to get involved in the real estate they have before the investment loses its value for lack of attention. Fraud is all too common. Predatory real estate brokers, crooked management companies and dishonest tenants can take ruthless advantage of vulnerable elders. Don’t let it happen in your family. If you see your aging parent declining in ability to manage real estate and they fight you on stepping in, it is time to seek legal advice so you can learn what options you have.
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