As I’d said for this entire year, the Waterloo Region real estate market is slow. Sales volumes for the September market were at (or very nearly at) 10 year lows in every segment. Valuations are a bit of a mixed bag compared to August but are lower on a year over year (yoy) basis in every sector except detached. It’s perhaps not surprising that single family detached has held firm as it does hold the most appeal for the majority of buyers.
Sluggish sales have pushed September market inventories to levels not seen in many years, something buyers are certain to be happy about. Apt. style condo supply has moved into buyers market territory at nearly 7 months. The townhouse market is balanced at 4.3 months of housing stock. While the detached and semi markets are still favouring sellers, inventories have risen substantially. Detached figures, at 2.9 months, are just shy of neutral.
The broader economic picture here and in the US is one of slowness. The Bank of Canada has cut rates by 1/4% for 3 meetings in a row now, and the US Federal Reserve cut its rate by 50 basis points in mid September. Further cuts in both countries are expected now that inflation has retreated a bit.
Locally, there’s been talk of lower college and university enrolment impacting the rental market. I think this is definitely a factor but the high mortgage rates we’ve sen are likely a bigger influence on investor sentiment. Much of the new housing stock was initially funded and sold as pre-construction when rates were much more favourable.
Investors are also likely to purchase townhomes and semis due to their relatively lower price points compared to detached. With higher purchase and mortgage costs, capitalization rates are down significantly compared to the early covid era.
For people looking to sell, time on market has increased substantially. A sale in the most competitive segment, detached, is now taking 6 weeks on average. If you own an apt. style condo, you can expect just over 2 months to sell. Semis and towns are at 45 and 53 days respectively. Offers with conditions are the norm again including ‘sale of buyer property’, a condition almost never seen just a few years back.
Being we haven’t seen an uptick in prices or sales activity it’s more than likely that the market will continue being tepid at best. The end of the year may see further price reductions due to weather and Christmas, with December and January typically quiet. Rates are coming down further, rewarding buyers who can afford to be patient this fall. See the Cornerstone Press Release for September
