Between the day-to-day running of a newer real estate office, and with the Kitchener-Waterloo market now in full-on ‘spring mode’, it’s been quite some time since I’ve had a chance to update my blog. I’d like to share a few quick thoughts on the current state of affairs in Waterloo Region, and on where I see things going from here for the remainder of 2019.
In line with much of what the Canadian media has been reporting on, 2019 has thus far produced a slower real estate market than that which we experienced over the past few years. While it’s definitely not as dramatic as the bursting of a true bubble, the combination of more level appreciation and reduced resale inventory have been main contributing factors to this dynamic. Here in Kitchener-Waterloo, as I’ve always been quick to say, we are well insulated against sudden market upturns and downturns – a result of a strong local economy, low unemployment, and an ongoing surge in public investment (education, transportation, infrastructure, etc).
Welcome news for Canadian home buyers came last month in the form of RBC’s ‘Housing Trends and Economic Report’, which noted that the aggregate housing affordability measure improved overall for the first time in three years – down to 51.9% (a reduction of 0.7%). For those of you who are unfamiliar with this index, it serves simply as an average percentage of household income which is required for home ownership in a given market.
I’ll use a couple of the statistics collected by RBC as examples. In Canada’s hottest markets, the affordability measure remains eye-wateringly high (84.7% in Vancouver), while in slower markets, particularly on the east coast, it is well below average (just 31.9% in Halifax – a city which is nevertheless experiencing a bit of a boom of late).
As I mentioned earlier, the Kitchener-Waterloo market tends to be well insulated against more dramatic market swings and our affordability index, while not calculated directly in RBC’s report, would be much more in line with the national average – still above 50%. The general slowdown in rising prices is still no doubt a relief for buyers who are in the market this spring, but the limited inventory of resale homes on the market means that competition for the best properties remains fierce. Multiple offer situations remain common in KW, and buyers still need to be putting their best foot forward when bidding on a home – particularly in desirable neighbourhoods.
I personally would always recommend spending no more than approximately 45% of annual household income on your home. Thankfully, our area’s exceptionally strong job market means that this is not unrealistic for many buyers. But, as always, I’d urge you to seek professional financial advice before beginning your home search. Qualifying for a mortgage is definitely more difficult now than it was three years ago, and you need to make sure your costs are sustainable before pulling the trigger on such a consequential purchase.
For the sake of convenience, please follow this link to view RBC’s report in its entirety
