Housing sales cool after wild year that was
Bidding wars no more, with new mortgage rules
WATERLOO REGION — The average sale price of a home in Waterloo Region rose more than 21 per cent last year, as desperate buyers drove prices to record highs before new government regulations cooled down the market.
After the wild ride of 2017, realtors say people are secondguessing their house spending plans in the wake of new rules designed to protect consumers from mortgages they can’t afford.
“Right now we’re going into an unknown,” said Sheldon Barclay, president of the Cambridge Association of Realtors.
“We had a crazy 2017, especially in the spring when the market jumped up so high . ... It was an anomaly, and we can’t really say what 2018 is going to look like.”
The average sale price of a home in Kitchener and Waterloo rose more than 21 per cent last year, to $429,900, while the average price of a detached home increased to $495,000. In Cambridge, the average sale price of a detached home rose about 22 per cent, to $460,000.
Realtors with the KitchenerWaterloo Association of Realtors made 6,549 residential sales last year, just a handful less than in 2016, topping $3 billion in total value for the first time. South of Highway 401, Cambridge home sales reach a 14-year high in 2017, with 2,452 units sold (not including condos) by members of the real estate board.
Housing prices came back down to Earth in the second half of the year, after the Ontario government introduced the Fair Housing Plan, although they remained above the average for the previous five years.
It now costs an average of $200,000 more to buy a home in Kitchener and Waterloo than it did 10 years ago, according to the Kitchener-Waterloo association. But the crazed sellers’ market, marked by bidding wars and offers well above asking, appears to have faded.
“I think the measures that were taken definitely caused people to step back and take a wait-and-see approach,” said Tony Schmidt, president of the Kitchener-Waterloo association.
“That cooled things down a bit, but they’re starting to pick back up again.”
Some sellers and buyers rushed to get in ahead of the new stress test mortgage lending rules that went into effect on Jan. 1, he said. The new restrictions might mean some people have to lower their expectations when it comes to the house they can afford, especially in higherend neighbourhoods, Schmidt said.
But looking ahead, he believes the real estate picture remains healthy in Waterloo Region because it’s an affordable alternative to Toronto, where the average price for all housing types was $735,000 last month.
“We’re very much on their radar now. I think you’re going to see more migration this way from people who can’t afford to buy something closer to the Toronto area,” he said.
Schmidt adds that the growth in Waterloo Region’s tech sector and the introduction of light rail transit will continue to keep demand strong for local homes.
Barclay also isn’t expecting a big decline in the market in 2018, given that there haven’t been lot of building permits issued so far for new homes in Cambridge. And the city is still the “litmus test” for commuters looking for a cheaper home compared to Milton or Guelph.
He expects the increase in housing prices to remain above historical averages, although closer to 10 per cent rather than the recordbreaking spikes seen last year.
“I think buyers are a little hesitant. They want to see how much of a correction, are prices going to drop? They’re holding on,” Barclay said. “But all in all, I don’t think there will be a big correction. Things are still selling, there’s just not the crazy bidding we saw before.”
With a provincial election coming later this year, Schmidt said he hopes the government doesn’t have any more regulatory changes planned for Ontario’s housing market. It’s been an upside-down year for realtors, and they’re hoping for some stability now.
“I sure as heck hope the political powers know that enough is enough for a while,” he said. “Let the market do what the market needs to do. We don’t need anymore announcements for the real estate market.”