Condo prices soar as local real estate market dips
Published Thursday, May 3, 2018 6:19PM EDT
If you’re looking to make money on real estate in the Kitchener-Waterloo area, then an apartment-style condo might be your best bet.
New data from the Kitchener-Waterloo Association of Realtors shows that condo sales volume and sale prices both rose year-over-year in April. Every other form of housing reported declines in both volume and price.
There were 185 condos sold last month in Kitchener, Waterloo, Wellesley, Wilmot and Woolwich, representing an increase of 13 per cent over April 2017. The average sale price for an apartment-style condo was $296,958, 10 per cent more than it was one year earlier.
Detached homes, on the other hand, saw a 30.7 per cent decrease in sale volume and a 4.2 per cent price drop, with 343 homes selling for an average price of $569,159.
The demand for condos was evident Thursday, which was the first day of sales for the newly named Garment Street project. Located on Victoria Street at Michael Street in Kitchener, Garment Street involves a redevelopment of the former Huck glove factory into a 23-storey condo tower.
People began lining up outside the sales office at 6 a.m., knowing full well that they would have an 11-hour wait before they could purchase a unit.
Many of the people in line told CTV News that they were real estate agents there on behalf of local clients looking to purchase units in the building for investment purposes.
“It makes sense for them, financial sense, to invest now,” said Shawn Ramautor.
Jeff Gibson, the founder of condo-focused brokerage Condo Culture, says about half of new condo buildings in Kitchener are now bought by investors.
Realtors at Garment Street said they believed the building could sell out by the weekend – meaning hundreds of units would sell for a combined total of about $75 million.
Overall, the number of residential real estate sales handled by KWAR fell from 765 in April 2017 to 616 in April 2018 – bringing it closer to the 10-year average – while the median sale price dropped from $475,000 to $440,000.
Sale volume was up month-over-month, as it typically is from March to April, while the median sale price and average detached home sale price both decreased slightly.
Tony Schmidt, the president of the realtors’ association, says the decreases likely show the impact of the introduction of new stress tests for prospective homebuyers earlier this year.
He says the tests are making it more difficult for some buyers to obtain financing, which is sending them to properties with asking prices below where they had initially been looking. In some cases, that could mean forgetting about detached homes and opting for condos instead.
While slightly less than half of the properties currently listed for sale in the Kitchener-Waterloo area have asking prices below $500,000, that cohort was responsible for 71 per cent of all sales in April.
KWAR reports that listing levels are running significantly ahead of where they were one year ago, although still well below the 10-year average for this time of year.
With reporting by Max Wark