With the summertime winding down and the kids beginning to make their return to the classroom, we in the real estate business are getting ready for the perennial increase in market activity, as families are back in town and people’s minds turn back to more business-oriented affairs. And as the pace of the Waterloo Region market pics up into September, we’ve also been given some new information just today to process – news from the Bank of Canada that interest rates are climbing once again, and another update from the newly constituted Waterloo Region Association of Realtors that points to a continuing stabilization in prices as we emerge from the frantic markets of the past two years.
The first piece of news is relatively straightforward – today’s increase of 75 basis points (or 0.75%) to Canada’s benchmark lending rate brings us as high as we’ve been at any point since before the financial crisis of late 2008. This increase didn’t come as a surprise to anyone who’s been monitoring the country’s economy, with the current total rate of 3.25% widely anticipated to climb even higher by the end of the year. While this does mean that mortgage rates will be going up over the weeks to come, most financial institutions will have already built this anticipated addition into the rates they’re offering right now – I don’t expect there to be any major short-term ramifications as a result.
Secondly, WRAR has just released their stats report for this past August. As was the case one month ago, I will again caution readers that the metrics have shifted somewhat from what we’re used to seeing in these monthly reports – Cambridge and North Dumfries are now included in the markets covered by these statistics, impacting the overall averages as well as how they compare to the averages seen one year ago, when only Kitchener-Waterloo, Woolwich, Wellesley and Wilmont were included. With that in mind, let’s have a quick look at where we stand.
The average sale price for all types of residential real estate in Waterloo Region in August was $750,849 – a marginal decrease of 0.4% from the same time last year. Meanwhile, the overall number of new listings was up by 19.3% year-over-year; a relatively abundant supply of inventory helping to continue the shift from a seller’s market over to one that’s more buyer-friendly. A total of 659 residential properties changed hands in Waterloo Region last month, marking a decrease of 8.1% year over year, while the average number of days spent on-market before selling creeps closer to one month – now standing at 22 days. In August 2022, the average detached home could expect to command $851,654 on MLS, while semi-detached homes stood at $655,813, and apartment-style condos fetched an average of $464,969.
While this week’s update doesn’t break unprecedented ground in terms of where our market stands now or where I see things going over the next few months, it should come as a reassurance to people on both sides of our region’s housing situation. Firstly, for sellers, comfort can be found in the visible proof that precipitous price decreases now seem to be in our rear-view mirror. Declines from the dizzying heights of this past winter were unavoidable in such an overheated market, but the price drops we saw between February and June were a little bit of a shock to a lot of folks who had been preparing to get their property on the market. With stabilizing prices, plans can be made with a little more confidence, and Sellers have a better idea of what they can expect to receive from the sale of their home, without fearing that the ground is about to shift again suddenly from underneath their feet.
On the other side of the equation, the past few months have brought much needed price relief to home buyers – even if the corresponding increases in mortgage rates have impacted the top-end of a lot of people’s purchasing power. All in all, I think that the balance and moderation of our current market will serve everyone’s interests in the long term. A hyper-inflated market is unsustainable, but the current balance ensures that our region’s housing supply leaves owners in good financial standing, while younger people who are looking to get their feet wet aren’t left feeling hopeless by unattainable price points.
