It’s a number that anyone who follows the real estate industry with any degree of regularity could see coming for months now, but somehow seeing it in print doesn’t make its realization any the less shocking: the average single detached home in Kitchener-Waterloo sold for nearly One Million Dollars ($997,654) in October.
Some might try to write the million dollar mark off as more of a psychological totem than anything else, as it’s true that the market has been surging towards this point for quite some time now. Average sale prices for detached homes locally crested $900,000 for the first time in February and, since then, have been creeping ever closer to seven digits. But the impact of these price increases really becomes apparent when we look at things in terms of appreciation year-over-year.
Last October, the average sale price of a traditional detached home was $742,596. While hardly cheap, this still represents a year-over-year gain of 34.2%, or $255,058 – over a quarter of a million dollars. Imagine that – $250,000 in appreciation in just 12 months. While this is quite obviously fantastic news for anyone who is lucky enough to be an existing homeowner in the Kitchener-Waterloo area, it’s not too difficult to see why so many young people are seeing their dreams of homeownership end in frustration, or how this kind of upward pressure on our cost of living may not be sustainable for very long on a community level.
Let’s turn the clock back a little further – to October of 2019, or the final full ‘hot season’ our market experienced before COVID made its presence felt. The average sale price for a detached home in Kitchener-Waterloo at that time (only two years ago, mind you) was $610,840, making overall appreciation stand at 63.3% over that 24-month period. While single detached properties have experienced the most marked pace of appreciation, the market as a whole hasn’t been far behind.
The average sale price for all property types is now a little over $840,000 – that’s an increase of 32.9% year-over year. Semi-detached properties gained value at an even higher rate: 34.6%, to an average sale price of $726,313 while apartment-style condos now command an average sale price of $464,738 – up by 18.1% over last fall. Meanwhile, freehold townhomes are up a staggering 39.4% year-over-year, to $693,324. These increases continue to be fueled by historically low housing supply, combined with ever-increasing out of market demand for homes in the Kitchener-Waterloo area.
I’ve banged this drum before, but at this juncture it is absolutely imperative that government from all levels work to expedite the construction of more new housing for Waterloo Region’s rapidly growing population. Prolonged studies and kilometres of red tape do nothing to help our residents who are increasingly being priced right out of homeownership, and this isn’t a problem that needs to continue for any longer than it already has. Our economy is strong enough to support an increasing population – it’s a primary reason why so many out-of-town buyers have been flooding into our market since last spring. I don’t see our housing market being in any danger of a bubble for this reason – but we urgently need to take steps to ensure that our workforce and their families can continue to enjoy the calibre of housing and quality of life for which Waterloo Region is renowned. The only solution to runaway appreciation is to increase housing supply, and to do it as quickly as is safely possible.
