Market shifting to higher-density housing
KITCHENER — Changing demographics is driving demand for higher density housing such as townhouses, condos and apartments in Kitchener and Waterloo.
More singles, more single parents and more childless couples are buying homes, Erica McLerie, a senior market analyst with the Canada Mortgage and Housing Corp., said in Kitchener on Wednesday. “That’s why we have seen a shift to more higher-density housing,” she said. “Demographics are playing a significant role in what we are seeing in the housing market.”
So far in 2017, housing starts for single-detached homes are down 19 per cent compared to a year earlier, but townhome starts are up 50 per cent and apartment starts are at about the same levels.
“There has been a shift in this market in the last four or five years to more higher-density housing, and fewer single-detached homes being built,” said McLerie.
McLerie spoke at a conference on housing markets and economic trends organized by the Kitchener-Waterloo Association of Realtors.
So far in 2017, the average selling price of homes in Kitchener and Waterloo is up 23 per cent, McLerie said. The pace of increases is expected to slow next year, but the sellers’ market will continue, she said.
“Prices will dip, on average, next year,” said McLerie. “The average will range somewhere between $445,000 and $459,000 in 2018. And $451,000 and $469,000 in 2019.”
Total housing sales in Kitchener and Waterloo next year are expected to drop slightly next year to between 6,200 and 6,800 units, and again in 2019, to between 6,000 and 6,800 units.
“So sales are trending slightly lower, but overall still relatively strong,” said McLerie.
Wage increases in the region averaged 1.2 per cent in the past year, far below the 23 per cent increase in housing prices. That makes housing more unaffordable, said McLerie.
She said population growth of 1.1 per cent a year, or 6,000 people a year, is expected during the next few years.
“The strongest growth in population is in the 55-plus age group, and that is due mainly to the fact baby boomers are aging,” said McLerie. “And what baby boomers want in housing is going to be very important in the next few years.”
One trend that has emerged among owners of single-detached homes is that they are hanging on to them.
“That myth about a lot of listings coming on the market because you are going to see all these baby boomers downsizing, well, statistics are not showing that that is happening,” said McLerie. “People are still staying in their ownership homes long after retirement.”
The cohort that ranges in age from 25 to 34 years old, which includes many first-time buyers, is also growing, she said. But there will be a decline among 45- to 54-year-olds, who are typically the move-up cohort that is selling homes to buy something bigger.