The red-hot real estate market of spring 2017 may be starting to seem like a distant memory – but its impact on local house prices is still being felt.
New data from the Kitchener-Waterloo Association of Realtors shows that the average house sale price in the area rose by 20 per cent year-over-year, going from $387,291 to $467,513.
It was the first time the average sale price topped $400,000, six years after it first crossed the $300,000 threshold. A rise to $500,000 within one year is possible, as RE/MAX has forecast an average sale price of $499,233 for Waterloo Region in 2018.
Broken down by type of housing, the average sale price for a detached home was $549,046, while apartment-style condos went for $271,940 on average, townhouses for $353,692 and semi-detached homes for $378,275. All were increase of at least 20 per cent over 2016.
Sale volume ticked down slightly from the record levels of 2016, but was still more than 15 per cent above any other year this decade. A total of 6,549 homes were sold in 2016 in the KW area – which also includes Wellesley, Wilmot and Woolwich – as compared to 6,613 one year earlier.
Realtors’ association president Tony Schmidt says 2017 brought the area strong demand for homes, which was not matched by a similar increase in people looking to sell their properties.
Over the past decade, it has typically taken about 43 days to sell a home after it hits the market. In 2017, the average was 19 days.
“The continued tight supply of listings … served to tamp down unit sales and drive up prices,” he said in a press release.
The data shows that home sales were at record-setting paces through the first half of the year before returning to more normal levels later on. Schmidt says this is likely because of the “psychological impact” of legislation from the provincial government taxing non-residents for home purchases.
Looking specifically at December – traditionally a quiet month in local real estate – activity and sale prices were down from November and essentially consistent with what was seen in December 2016, as the market ramped up to a fever pitch.
The realtors’ association reported 301 properties changing hands for an average sale price of $423,723, up slightly from 298 sales for an average of $421,432 one year earlier. November had brought 425 sales at an average price of $445,363.
It was a different story in Cambridge and North Dumfries, where the Cambridge Association of Realtors reported increase in activity and sale prices over one year earlier.
According to the association, 102 residential units were sold for an average price of $468,612 – numbers which represent increases of 7.4 per cent and 11.5 per cent over December 2016.
Analysts believe the early months of 2018 will likely see local residential real estate activity drop due to the introduction of new mortgage stress test regulations, which could leave some prospective homebuyers unable to purchase the homes they want, while prospective sellers may wait to see the impact of the new regulations before listing their properties.