Kitchener-Waterloo Home Sales Decreased in 2018

Kitchener and Waterloo real estate went through a decline in residential home sales in 2018 relative to the previous year. Experts blame rising interest rates as well as mortgage stress tests for this downturn. Here are the details:

A Closeup on Home Sales

During 2018, there were a little over 5,800 homes sold through the MLS® system in the Kitchener and Waterloo area, according to the Kitchener-Waterloo Association of Realtors (KWAR). This was a decline of 11.1% compared to the total number of home sales in 2017.

December 2018 alone saw 263 properties being transacted, a more than 13% decrease relative to the same month last year. This is just slightly under the ten-year December average of 268.

“The combination of rising interest rates and the mortgage stress test definitely took some steam out of the market relative to what we saw in the previous two years. These types of impediments are most impactful on first-time as well as other buyers entering the housing market,” said Brian Santos, President of KWAR, as cited on the CREA website.

The total dollar volume of all residential real estate sales was $2.8 billion in 2018, an 8% drop compared to 2017.

A Breakdown of all Categories

In 2018, real estate in Kitchener-Waterloo saw a 16% decline in the total number of detached homes sold (3,355), while the number of condo units transacted (1,553) increased by 6.4%. There were also 417 sales of semi-detached homes, accounting for a significant 23.6% year-over-year drop. Freehold townhouses saw a smaller reduction, of just 7.7%, with a total number of 431 units changing owners.

Average Sale Prices Increased

Across the board, the average sales price of each residential property category increased by a total of 3.4% to $483,537 in 2018 compared to a year ago. Individually, the price of a detached home was $575,412 (up 4.8%), apartment style condos averaged $304,676 (a 12% boost), townhomes grew 5.5% to $373,307, and semis reached $396,391, which was an increase of nearly 5%.

Looking beyond average sales prices to median prices, residential properties as a whole went up 3.6% to $445,304 while the median detached home increased 6.1% year-over-year to $525,000.

Months of Inventory Were Low

With demand exceeding supply, the number of months of inventory in 2018 remained less than two. Historically, this figure has been between three and four months. A listed home stood on the market for an average of 24 days in 2018, which is significantly less than the ten-year average of 40 days, but slightly more than 19 days from back in 2017.

“Even though prices increased more moderately overall compared to the last two years, they continue to respond to strong demand and the desirability of our area. For those would-be buyers who have been sitting on the fence these past two years, home prices are only getting further out of reach, as supply remains low and demand strong,” said Santos for CREA.