Home prices continue to rise despite sales dip

WATERLOO REGION — Despite a double-digit decline in the number of sales, the local real estate market still managed to post decent price increases in 2018.

Year-end numbers released Friday by the Kitchener-Waterloo Association of Realtors showed a drop in residential sales of just over 11 per cent, from 6,549 in 2017 to 5,823 last year.

Association president Brian Santos said the decline in sales speaks to a lack of available inventory that has fuelled a seller’s market for months on end.

The association ended 2018 with less than two months of supply — meaning that it would take about two months to sell all of the homes currently available. “We usually sit at double that amount of inventory,” he said.

Rising interest rates and the introduction of the mortgage stress test also served to cool off the “roller-coaster” of a market seen in 2017, Santos said. “It’s more stable than it was before.”

The association saw the average yearly price increase 3.4 per cent for all properties to $483,537. The average median price rose 3.6 per cent to $445,304.

While sales of detached homes were down about 16 per cent in 2018, the average price rose 4.8 per cent to $575,412. The median price for a detached home rose to $525,000, up 6.1 per cent.

“It’s a healthy increase in the market,” said Santos.

It took an average of 24 days to sell a property in 2018, compared to 19 days the year before.

Apartment-style condominiums saw the largest yearly jump in average price, up 12 per cent to $304,676. Condominium units were the only segment that experienced an increase in sales volume last year, too, with an increase of 6.4 per cent.

Affordability is the key to condo popularity. “It’s becoming increasingly more difficult for first-time buyers to get into the market,” Santos said. “It seems like the cards are stacked against them … It’s just harder for them to attain their dream.”

For many buyers, condos present an ownership possibility that semis, townhouses and detached homes can’t.

They’re popular among young professionals who can surround themselves with urban amenities and often aren’t far from their workplaces. They’re also a popular choice for investors.

Santos said his colleagues aren’t seeing as many buyers coming into Waterloo Region from the Toronto area as before, but quality of life and lower prices still make the region an attractive destination.

“For someone coming from the GTA, it’s still a relative bargain for them.”

The average sales price for 2018 in the Toronto Real Estate Board actually dropped 4.3 per cent but still stood at $787,300.

For the month of December, residential sales for the Kitchener-Waterloo association were down 13.2 per cent to 263, compared to same month a year earlier. The previous 10year average for December sales was 268.

The monthly average price for all properties stood at $476,758, up 11.9 per cent year over year.

A tight rental housing market in Waterloo Region has seen prospective tenants turning more frequently to realtors to help in their search, Santos noted. There were 733 residential leases processed through the association’s Multiple Listing System last year — an increase of 22 per cent over 2017 and 40 per cent more than in 2016.

Looking ahead, Santos believes the 2019 market will look much like 2018’s.

“It’s still going to be a seller’s market out there,” he said, predicting a gradual increase in prices with stability overall. “A stable market is a benefit to everyone.”