A soft landing appears likely for Kitchener Waterloo as year-over-year home sales in March declined to their lowest level in 10 years. March residential MLS sales in Kitchener Waterloo tumbled to 394 from 434 last March. Perhaps most telling, March home sales failed to surpass March, 2009 sales of 397. Five short years ago marked a trough in home sales as we were just emerging from the mini recession brought on by the credit crisis of 2008.
While it's convenient to blame Old Man Winter, the market is changing and I think it's time we looked at other mitigating factors:
First time home buyers from 2007-2011 may have used $0 down and 30-40 year amortizations to purchase. They haven't been in their homes long enough to offset the significant CMHC policy changes enacted in the interim.
Household incomes are declining as manufacturing jobs disappear. The competition for remaining jobs leaves many working for minimum wage.
Affordability has deteriorated. More and more Baby Boomers are retiring every day. Their emphasis is on saving not spending and those in search of cheaper accomodation will be cashing out and leaving Kitchener Waterloo.
Household debt remains at elevated levels. Consumers are reeling from the cost of gas, home heating, electricity, insurance, food, property and income taxes and it's expected to get worse. I read today that the poorest 20% of families in Canada have more debts than assets.
Finally, there continues a tug of war in the mainstream media over whether there's a housing bubble in Canada. This leaves Kitchener Waterloo home buyers exhibiting all the emotions pictured on the sign above.
So where do we go from here? Regular readers of this Kitchener Waterloo real estate blog know that homes for sale on MLS have been low in recent months. So despite reduced sales, prices have held steady. Active listings on the Kitchener Waterloo MLS sit at 1424 or nearly a 4 month supply of homes for sale. This is still a faint sellers market but my sense is that a change in real estate market conditions is here as greed has given way to fear.
In summary, my view on the market hasn't changed. Buyers need a 10 year plan and should treat their home as shelter rather than an investment.
If unanswered questions have you exhibiting the symptoms pictured above, feel free to contact me for answers 519-505-4488 firstname.lastname@example.org.