Canada's housing as a whole market has been scorching. Our nation's home prices rose 26% year over year in 2021, the highest level on record, while at times in Ontario we have seen home prices jump on average as much as 50% this past year.
But this spring season, as the snow was melting, the housing market was cooling a little. It's far from a bust, but the crazy days of homes being on the market for just a few days (at most) before being snapped up are not quite as common.
This has led, of course, to lots of panicked headlines in some circles, certainly on social media. But is a cooler Waterloo Region housing market really a bad thing? That's what we are going to take a closer look at here.
Why is the Waterloo Region Housing Market Cooling? A Look at the Stats
What does a cooling market in our region really mean? According to the Kitchener-Waterloo Association of Realtors, the average price of a detached home in Kitchener and Waterloo declined 6.4 percent in April compared to March, to $1,060,992. The picture was similar in Cambridge, where detached home prices fell 5.5 percent month over month to an average of $972,782.
The cooling spring market has resulted in buyers paying over $150,000 less for the average detached property in Kitchener and Waterloo since February, and nearly $175,000 less in Cambridge.
This is not to say that the market for sellers is in any way, not a favorable one. Last month, the average sale price for all residential homes in Kitchener and Waterloo was $907,205, down 5.5 percent from March but up 19.6 percent year over year. The overall average price in Cambridge was $897,913, down 5.7 percent from March but up 20.5 percent from April 2021.
The detached average in Kitchener and Waterloo has increased by 18% year over year, while the detached average in Cambridge has increased by 19.4% since April 2021.
How a Cooling Market Can Benefit Waterloo Region Homebuyers
As you might expect, a cooling housing market does offer benefits to homebuyers, some of which you might not have thought about:
More Homes to Choose From
When the real estate market was at its most active in KW the number of homes available for homebuyers to choose from was very limited, and so those who really did not want to wait to buy a home settled for a home that was almost, but not quite, right for them in order to get on the property ladder.
There is still not a large inventory of homes available for sale, but there is enough of a selection that homebuyers, working with a great local real estate agent, have a better chance of being able to slow down their search a little and take the time to find a home that is just right for them.
There is often a lot of attention paid to selling price, but a home is more than what you paid for it. Once you close on a home you have to enjoy living in it, so the closer it is to being the home you really want, the better.
Home shopping in a hot real estate market is stressful, and often very disappointing and unsuccessful. A cooling market means that those would-be homebuyers who 'dropped out' of the race to buy a Waterloo Region home because they lost in a bidding war - and some lost out multiple times - and were simply too frustrated to continue the hunt - can now begin looking at homes again with more optimism that their best offer will be accepted.
Better Terms at Closing
In a very hot real estate market home buyers sometimes have to make concessions that they might have preferred not to, in order to win a fierce bidding war. We usually advise against such things - especially when it comes to home inspections - but people do agree to short closing times, paying fees that sellers usually do and more.
Once the market is less frantic, it's far more likely that your best offer will be enough, and that you won't have to concede things that you don't want to. There is often even room for a little negotiation, something that there is little chance to do when a market is red hot.
There is Good News for Waterloo Region Homesellers Too
This influx of returning buyers to the market is good news for sellers too. Often when they read those scary headlines about cooling real estate markets those who were hoping to sell their property soon - perhaps having waited until the spring, as that is often considered preferable to selling in winter in KW - quickly assume their home won't sell, or that they will lose out in financial terms.
That's not the case. As the figures quoted earlier show, the average selling price for KW homes is still significantly higher than it was a year ago, and so the ROI is still likely to be very good.
For both Waterloo region homesellers and homebuyers, the best guide to the market RIGHT NOW, is a local real estate agent. We are out there every day, and see the changes in the market in real-time, faster than any media pundits and from a less excitable point of view. This year still looks to be a great one to buy or sell a home in the Waterloo Region, and we would be delighted to help you do either.
To learn more, contact us today, or book a free, no-obligation Zoom meeting so we can discuss exactly what you are looking for, and how we can help.