News, statistics, predictions and opinions on home prices, rent, market activity and other indicators.
What’s happening in real estate news and how the Kitchener-Waterloo market fits in.
Home price decline resistance
Kitchener-Waterloo is on the list of ten communities showing house price decline resistance.
The information comes from new analysis at Konfidis.com of detailed MLS transaction-level data calculating average home sold price at the time of sale. The data suggests that there are several communities in Ontario that have experienced a resistance to further price decreases. This data shows that the decline in home sold prices has slowed down and, in some cases, stopped in Kitchener-Waterloo and nine other cities.
The other cities are Ajax, Clarington, Guelph, Kingston, Lindsay, Markham, Newmarket, Oakville and Richmond Hill.
Kitchener average rent for a one-bedroom unit increases 11%, while average rent for a two-bedroom up 16% year over year.
Average rents in Canada up 11% year over year.
Kitchener finished 16th on rentals.ca list for average monthly rent in August for a one-bedroom at $1,723 and 18th for average monthly rent for a two-bedroom at $2,149.
Year over year, average monthly rent in August for a one-bedroom in Kitchener was up 11.2% and up 16.2% for a two-bedroom. But month over month, average rent in Kitchener in August was down 5.8 %for a one-bedroom and down 1.5% for a two-bedroom.
Seven of the top 10 cities for popularity based on online page views per listing in the third quarter (July and August only) were in British Columbia. Waterloo was the highest ranked city in Ontario.
The total number of listings on Rentals.ca is higher than one year ago, and the average listing is getting 38% more page views, suggesting significantly more demand than last year. This year’s listings received almost 70% more page views than the pandemic-impacted August 2020 figures.
The average rent for single-family homes in August was $3,061 per month, up 13% over August 2021. The average rent for condo apartments was $2,312 up 7% over August 2021. The average rent for apartments was $1,729 per month in August up 5.5% annually.
Rents for the largest units in the market continue to see higher annual appreciation than smaller suites. It is possible more upper-middle class renters are in the market than in previous years because so many Canadians have been shut out of home ownership with higher interest rates.
Canada’s housing market isn’t melting down. A more nuanced approach shows that prices are in the expected range.
Smaller and hence lower-priced homes might sell more frequently during slowdowns, which can lower the average price.
According to TRREB data, sales in the GTA were down to 5,627 units in August, a year-over-year decline of 34.2%, while the average house price rose by a tiny 0.9%.
But TRREB’s Home Price Index (HPI) is a better indicator of price movements. Compared to August last year, the HPI was up 8.9%, which is a lot different than what is being reported in the media.
The shift from expensive to cheaper homes has contributed to the decline in average home prices. But the decline in average prices does not necessarily mean that the price of an average or typical home has also declined by the same rate. Average prices represent the volume and price of all homes being sold –> not considering the style and size of the homes being sold. Because of interest rates, the purchasing power of home buyers has been reduced considerably this year. As a result, the size of homes being sold this year are much smaller than last year.
Also, in terms of sales volume, last year’s ultra-low mortgage rates were partly responsible for the extraordinary sales volume because many households seemed to have advanced their home purchase from 2022 to 2021.
Kitchener–Cambridge–Waterloo (-0.7%) recorded the largest price decrease of 27 CMAs
New home prices in Canada increased 0.1% in July compared with June—the smallest increase since June 2020.
This is below the average increases witnessed in the first two quarters of 2022 (+1.1% in the first quarter and +0.3% in the second quarter).
Prices were up in 5 of the 27 census metropolitan areas (CMAs) surveyed, unchanged in 17 and down in 5. Of the five CMAs that reported price decreases in July, Kitchener–Cambridge–Waterloo (-0.7%) recorded the largest—its first since July 2019.
Kitchener will not implement a vacant home tax
Under the province’s Fair Housing Plan, municipalities in Ontario have the option to implement these types of taxes in an effort to increase the housing supply for both renters and buyers.
The city says it decided not to implement the tax for a number of reasons, including Kitchener’s low vacancy rate and the cost of implementation.
Two forces that will save Canada from a housing crash
Over the past decade Canada’s population has grown over twice as fast as the average of its peer countries in the OECD. Ottawa’s target is to bring in a record 1.3 million new permanent residents by 2024 and that should add an estimated 555,000 new households.
2. Households size
Canadian households are getting smaller. In 1851, there were an average of more than six people per household. That fell to 4.3 people by the early 1940s and to 2.4 in 2021.
Since 2016, one-person households have also become more common, so much so that almost 30% of Canadians now live alone.
In the five years leading up to 2021, the average household size fell by 0.02 people. Even this small decline raised the number of households by 140,000 or almost 30,000 a year.
The size of households has a big impact on the number of housing units needed by Canadians, whether owned or rented.
Two things compared
The number of multi-generational homes has risen by almost 80,000 over the past 10 years. This is about 5% of new households. At the same time, the number of one-person households accounted for 700,000 dwellings, 44% of households.
Demographic demand for housing in Canada is strong — and it’s getting even stronger. So strong that RBC expects Canada will gain 730,000 households by 2024, compared to 2021 — 240,000 new households a year.