'Scared to death': Why some homeowners won't sell during a red hot market
Published Wednesday, March 8, 2017 6:04PM EST Last Updated Wednesday, March 8, 2017 6:52PM EST
Every real estate agent says the same thing: Right now, Waterloo Region is a seller’s market.
On the surface, that sounds like great news for Gerry Best.
Eight years ago, Best bought a six-bedroom house in Cambridge’s South Galt neighbourhood.
Now that his kids have grown up, he and his wife are ready to downsize. They believe that they’ll be able to get at least twice the $342,000 they paid for their house in 2009.
There’s just one problem: Where will they find another house?
“We’re scared to death,” Best says.
“We’ve been watching for months – there’s no inventory. There’s nothing to buy.”
That lack of inventory is regularly cited as one of the key factors behind Waterloo Region’s skyrocketing house prices. In the Kitchener-Waterloo area, sale prices jumped by 10 per cent from January to February – a higher increase than is typically seen over a year.
The number of homes listed for sale at any given time is a small fraction of what it was even a year ago, when real estate agents started raising the alarm about demand outpacing supply.
That situation has led to some very unusual things happening locally. Some homes are selling within days, if not hours, and often for well above their asking price.
Other prospective buyers are taking things a step further.
Last spring, Chris Schaus bought a property in Cambridge, tore down the house that was there and built a new one in its place.
He expected to spend the rest of his life there. Instead, a few months later, someone came knocking at his door with an offer of $700,000 – or more than $200,000 above what he’d spent on the property.
“I had an offer on the table I just couldn’t turn down,” he says.
Real estate agent Antonio Nogueira says he doesn’t see any signs of the market reversing course anytime soon.
“I’ve been in this business for 24 years, and I’ve been hearing that this is a bubble every year for the last 24 years,” he says.
“The ceiling’s not visible. We have to somehow convince our buyers (that they have to) pay a lot more than they were used to paying.”
As Nogueira sees it, people like Best are in “no-win” situations – because while they want to reap the rewards of selling, finding a property to buy is nearly impossible.
“It’s very frustrating to try to make a buyer happy in today’s market,” he says.
The Canada Mortgage and Housing Corporation keeps a close eye on real estate markets across Canada, including Waterloo Region’s.
Ted Tesiakopoulos, the organization’s regional economist for Ontario, says that while rapid growth in the Toronto and Hamilton markets may slow down this year, bidding wars will remain the norm in Waterloo Region.
“It’s still quite an affordable market on a relative basis, when we compare Kitchener to the Torontos and the Hamiltons of the world,” he says.
That relative affordability has been cited as the other key factor behind the local market’s surge. Because Toronto is dealing with even more pronounced issues around low demand and high prices, analysts say, more prospective buyers from the GTA are making their way down Highway 401.
Nogueira agrees, saying he expects that trend to continue – which in turn will keep pushing up price in Waterloo Region.
“To GTA people, these prices are nothing,” he says.
“We could still go up another 20, 25 per cent, and we’ll still be substantially below the Greater Toronto Area.”
With reporting by Nicole Lampa