Waterloo region real estate market returning to 'balanced state' due to rising interest rates, expert says
CBC
After drastic influxes in the market during the worst of the pandemic, the real estate market in Waterloo region is "going back into a more balanced state" mainly due to rising interest rates, says a local expert.
"I would regard it as balanced," said Paul Anglin, a real estate professor at the University of Guelph. "It's not favoring the sellers as was true a year ago."
Interest rates on home loans have climbed this year due to six separate hikes from the Bank of Canada in an effort to combat rising inflation. It was as low as 0.25 per cent back in January, but it now sits at 3.75 per cent.
Although rising rates are the "dominant" factor in the recalibration of the market, Anglin also attributes this to the lack of clarity about where interest rates are going, and discussions of a possible recession.
Anglin said a widely used measure of a balanced market is the monthly ratio of sales to listings at the beginning of the month.
"And the current number is not too far from normal," he said.
Last month in Waterloo Region, there were 489 properties sold between single family homes, townhomes, condos and semi-detached properties, compared to 928 properties that were up for sale. A year ago it was virtually the other way around.
"The number that I often pay attention to is how many days does it take to sell a house and that has increased compared to a year ago," he said.
Last month, a home sat on the market for an average of 22 days, more than double from a year ago. The last time we've seen this number was close to the start of the pandemic in May 2020.
"The days on market is not so rushed as in the past," Anglin said. "With an average of about three weeks, there is enough time for buyers to compare alternatives without being so long as to make a seller too worried that they will not sell to any buyer."
The sales price on average for a single family home in October of this year was about $860,500, which is down by about 27 per cent from the height of the market back in February.
Condos have seen a drop too but not as significant — last month the sales average was about $488,200, down 14.5 per cent from February.
Despite this, the sales price on average in October for single family properties and condos is much higher than pre-pandemic levels — they're up about 145 per cent respectively from October 2019.
In September, the prices of new homes fell by 0.1 per cent nationwide — it was the first drop since before the pandemic. However, Cambridge, Kitchener and Waterloo saw a more dramatic decrease of 0.6 per cent.
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