I was feeling like a broken record for pretty much this entire year. In every video and blog post I sounded the same. ‘Slow, slow, slow, etc.,’ turned out being an apt description of Waterloo Region’s 2024 real estate market. This was a bit of a surprise as most everyone in my industry (and in the media) expected an uptick in volume and prices by mid year due to widely expected interest rate cuts both here and in the USA.
But the cuts to US rates failed to materialize on cue. Canada, with a clearly slowing economy, ended up moving first, with a 25 basis point (bps) cut from the Bank of Canada in early June. This was followed by two more identical cuts at the next two meetings. By September the US had moved as well, dropping their Fed Funds rate by 50 bps, the first time in over a year. But the Bank of Canada wasn’t done yet, lowering our overnight rate by another 50 bps at each of the next two meetings.
Rates had dropped from 5% to 3.25% over 6 months and yet Waterloo Region’s real estate market barely budged. While the Bank of Canada argues that we are not in recession, many pundits in the financial press beg to differ. I’m certainly of the belief that the economy is struggling due to the inflation we’ve seen over the last few years. It appears to have spilled over into the 2024 real estate market where we’ve seen sluggish sales for the entire year and prices more or less flat in every segment.
Detached for December came in at a hair under $900,000 compared to yearly average of $911,000. The market reached $952,000 in the spring with a bottom of $864,000 in the fall.
Semis traded across a much narrower band of only $55,000. Prices peaked in the spring just shy of $700,000 before falling back to a low of under $650,000 in the late fall. The December figure of $645,000 is slightly lower than the yearly average of $663,000.
December townhouse sales came in at $630,000, only $8,000 below the yearly average of $638,000. The price spread was bit greater than the semi market, reaching $70,000 by comparison. Again we saw a high, $666,000 reached in the spring, and a low, $596,000 in the fall.
It was the same for apt. condos as well. December, at $476,000, finished $3,000 higher than the yearly average of $473,000. The segment saw total swings of only $50,000, with highs just under $500,000 and lows just over $450,000.
Looking at historic prices, Waterloo Region’s 2024 real estate market averages are slightly lower than the 2023 numbers in every category with the biggest downturn found in semis and townhouses, each lower by roughly $15,000. 2024 valuations turned out to be pretty much on par with the 2021 figures, with detached and apt. condos sitting slightly higher, at +$11,000 and +$25,000 respectively. In comparison to the pre-covid era, real estate prices have risen dramatically with every segment except apt. condos seeing well over 50% gains. Apt. condos are up 38% even in the face of almost 8 months of inventory.
Sales volumes were low the entire year, with multi-year lows in many sectors at various points in the last 12 months. With the exception of semis, December was indeed slow, but not as quiet as it’s been in the previous two years. Semis on the other hand had only 21 sales, hitting a new 5 year low in the process.
Not surprisingly we’ve seen a sharp uptick in inventories as well. The apt. condo market saw the biggest gains with December coming in at nearly 8 months. This segment, just like the GTA’s is clearly in buyer territory. Townhouses are at 4.5 months, sitting solidly at the higher end of balanced or neutral conditions. The most popular sector, detached, remains a sellers market as does semi-detached. This is not at all unusual for December but inventories have also been high throughout the year.
Taking a look at Waterloo Region’s sold to list ratio, it currently sits at parity for detached and has for most of the year aside from a brief rise to 103% in the spring. For semis, the December ratio is also at par but reached as high as 110% in May. Towns are at 99% but reached as high as 103% in the spring. Demonstrating the sluggishness in the sector, apt. condos has remained in the high 90s this entire year.
The 2025 Waterloo Region real estate market will be hard to predict due to our US neighbours. Tariffs are just one of many concerns given the bombastic rhetoric we’ve been hearing state-side. I don’t doubt that Trump will try to impose some kind of punitive measures on our economy being he did so last time he was in office. While many buyers and sellers are uninterested in politics, others do pay attention and may be less sanguine about our real estate market than before.
On the other hand, the impact of a 1.75% cut to our overnight rate may finally begin working its way through the economy. South of the border I could see Trump and Co. pushing tax breaks for the wealthy and more cuts to the Fed rate again, a repeat of his playbook the last time in office. If the US economy really takes off, ours may be pulled out of its sluggishness as well.
How these factors will impact the Waterloo Region real estate market in 2025 remains to be seen. The area is a great place to live, with a strong and healthy economy. Manufacturing and tech continue to supply solid employment opportunities. Our long term prospects are very good indeed, despite what is going on with our neighbour. We are living in interesting times!
