Contrary to a recent Macleans magazine article, Kitchener Waterloo real estate won't crash in 2013. What likely will crash further is the tattered reputation of Macleans following their January 9th piece entitled "Great Canadian Real Estate Crash of 2013". The article cites declining sales in the Vancouver and Toronto markets among others while conveniently neglecting to mention the boom in Calgary. However, as regular readers will know, markets are local so let's turn our attention to what's in store for Kitchener Waterloo real estate in 2013.
First, let's look at sales in previous years. In 2012, MLS resale properties sold in Kitchener Waterloo totalled 2393 in the first half of the year and 1884 in the second half. For comparison, sales for the same periods in 2011 were 2316 and 1931 respectively. To summarize, sales were up about 3% and down about 2% during these periods.
What about prices? The median MLS resale price in Kitchener Waterloo in both halves of 2012 was $280,000. In the first half of 2011, it was $270,000 while the second half fell marginally to $269,000.
So what will 2013 bring for Kitchener Waterloo real estate? The short answer is more of the same. Those waiting for the local market to crash in 2013 will be left wanting. Simply put, there's no impetus for the market to crash. The changes in mortgage financing announced June 21 last year did impact the market. However, the target of those changes, in my opinion, were the investors and speculators using leverage and loose CMHC lending practices to profit.
What about interest rates? Many borrowers take 5 year mortgages. In April 2008, the best discounted rate available was 5.59%. Currently, a discounted 5 year mortgage rate can be found in the range of 3.09%. Even accounting for the shortening of the maximum amortization from 40 years to 25 years, mortgage payments will decline upon renewal and significantly more of that payment will go to paying off the principal and creating equity for the homeowner.
The local economy continues at a steady pace though not booming as it did in 2011. Research In Motion is regaining momentum with the upcoming launch of Blackberry 10. The technology sector continues to thrive and grow. With Light Rail Transit on the horizon, large investors are setting their sights on investing in the promise of a progressive community.
The number of active listings on the Kitchener Waterloo MLS sits at 1074. This equates to about a 3 month supply of properties for sale while a buyers market would see 7 months or more of inventory for sale. Those suggesting retiring Baby Boomers will be putting their homes on the market to fund their retirement won't find much evidence locally. In my opinion, the prohibitive cost of retirement homes will see the majority of these homeowners staying put. I would suggest the age of 80 is where these homeowners will contemplate a retirement home to live out their golden years.
As always, for sound advice on your real estate needs, put down your Macleans magazine and call, text or email. For my clients, 2013 will be business as usual as there's simply no evidence to support a crash of Kitchener Waterloo real estate.
Century 21 Home Realty Inc. Brokerage
"Delivering results since 1989"