Sometimes extraordinary things can start to feel routine if they happen often enough – a phenomenon many of us in the real estate business might be beginning to experience for ourselves. Ever since the pandemic bit down on us last spring, housing prices have soared in defiance of all initial expectations here in Waterloo-Wellington. The latest report released by KWAR just this past Monday makes this apparent and reveals a stunning 30-plus percent increase in the sale price of the average residential property in Kitchener-Waterloo since March of last year. I know statistics can often make peoples’ eyes start to glaze over, but that 30% figure in real terms looks like this:
Average residential selling price, March 2020 – $583,752
Average residential selling price, March 2021 – $765,393
To be clear, even though we’ve seen monthly average sale price increases in the tens of thousands since last summer, this is not a normal function of our market. Historically, yearly appreciation in a normal market sees price increases in the range of 3-5%. Price jumps of 30% are obviously not sustainable over the long term, and we in the business have been encountering mounting frustration from homebuyers who are quite literally watching themselves being priced out of the market on a week-to-week basis.
I’m by no means ready to call this a ‘bubble’ in the Waterloo-Wellington housing market – our fundamentals are just far too strong for there to be a collapse in prices (i.e. our robust job market, diverse economy and massive public and private investment in infrastructure and development), and demand for housing here remains stronger than ever. But along with these latest statistics comes a hint that things might just be beginning to stabilize in our market as we make the turn into the second quarter of 2021. Let’s take a quick look at those highlights.
While the year-to-year increase is dizzying, the pace of month-to-month growth in average sale prices between this past February and March has come back down to Earth – that number is a much more typical 1.5%. Meanwhile, the average sale price of a single detached home in Kitchener-Waterloo has actually slipped by a small margin, down by 1.4% since last month to $899,460. Again, I’d like to reiterate that this tiny slip is by no means reason to hit the panic button – this was entirely to be expected as more inventory comes available in the yearly frenzy of the spring housing market. In fact, KWAR’s numbers show that a massive 1,359 new listings appeared in our market over the month of March. For the record, that’s nearly 65% more new homes coming available for sale in a single month than the 10-year average for our market. It’s natural that increased selection for buyers and more available inventory will start to reduce the ferocity and frequency of the bidding wars we’ve grown accustomed to around here.
This increase in the total number of available homes for sale is also reflected in the sheer volume of activity we saw in our market last month. For the first time ever, over 900 homes changed hands in Kitchener-Waterloo in March 2021. That final tally was really closer to 1,000 (993)! Even as the market has begun to stabilize overall, the enormous price increases of 2020 created a surge in demand for alternative styles of homes, especially semi-detached properties and apartment style condos. Nearly 200% more semi-detached homes were sold in March 2021 than in the same month last year. Meanwhile, condos are continuing their strong performance with 80% more sales than this time last year, and at an average of 12% higher sales prices (up to $423,470).
One last time – I do not see this as an indication of a looming bubble. Demand is simply too strong to indicate that anything more than a stabilization of our market is at hand. If you have any questions about what’s going on in our housing market here in Waterloo-Wellington, please feel free to reach out at any time!
