The new year is always an exciting time in real estate and as I survey the year to come, 2011 will be no exception. First, let's look back and see how we did with last years forecast. My Kitchener-Waterloo Real Estate Sales Forecast 2010 called for a return to a more traditional market where 2/3 of the buying and selling was done between January and June. The first 6 months of 2010 saw 57% of the total sales activity occur. I forecast 4100 sales and, in what turned out to be a banner year, we had 4794 MLS sales in Kitchener-Waterloo. I predicted prices would peak in the spring and give back some of the gains in the latter half of the year. That didn't come to pass as a shortage of properties for sale kept prices relatively firm. My prediction of a higher Bank of Canada rate by .75% was accurate. The discounted 5 year mortgage rate at years end was in the 4% range rather than 4.75-5% I had forecast. All things considered, I did at least as well as our local weather forecasters ie) some hits and misses.
So what will 2011 bring? The Bank of Canada and the Harper government through the Canada Mortgage and Housing Corporation appear determined to tighten credit and increase home equity. The changes announced on Monday seek to keep housing-related debt in check. On the whole, I think it's good policy as too much leveraged debt can create havoc when the bills come due ie) interest rates rise. I'm predicting 2011 will see 4400 residential MLS sales in Kitchener Waterloo. This would represent a decline of 8% over 2010 results. Once again, I anticipate strong demand in the first 6 months of the year as buyers continue to take advantage of low interest rates. This coupled with employment gains led by our technology companies will buoy local real estate and keep people moving to Kitchener Waterloo. The introduction of Research In Motion's tablet computer dubbed the PlayBook(pictured above) is likely to provide a significant boost to the local economy. As well. the expansion of Open Text will see a number of new employees relocating to Kitchener Waterloo.
Unfortunately, it's not all sunshine and lollipops. On the interest rate front, I expect the Bank of Canada rate to increase 1% to end the year at 2%. I look for a discounted 5 year mortgage rate in the range of 5% at the end of 2011. I expect this will negatively impact housing affordability and cause real estate price growth to stagnate. Ontario consumers have been hit by by rising taxes, climbing utility costs, increasing condominium fees as well as higher gas and food prices. The high Canadian dollar will serve as a drag on exports as it affects our local manufacturers ability to compete in North America and globally.
To summarize, I feel Kitchener Waterloo real estate is poised to enjoy a healthy 2011 but I do see potential clouds on the horizon for 2012.
If your real estate is keeping you up at night, I'm always happy to consult with you to determine if the time is right. I can be reached at 519-505-4488 or firstname.lastname@example.org.
Century 21 Home Realty Inc. Brokerage
"Delivering results since 1989"