Eric | Sep. 28, 2020
Kitchener-Waterloo Real Estate Market Report
A typically slow time of year saw a rush of transactions. Buyers and sellers were out in force with 833 new listings in August (a 43.8% increase vs August last year) – and 686 sales (a 48% increase vs August last year). The “stay-at-home”, “stay-cation”, “work-from-home”, “stay safe” narrative continued in August pushing people away from densely populated areas and cramped living environments to suburban living in homes with more square footage and larger, more accommodating back yards. Couple this narrative with greater confidence in the measures being taken by Real Estate agents, their sellers and Government to stay safe and buyers were pushed onto the streets and sellers were encouraged to allow their homes to be shown. This shift to seeking out space, confidence in safety measures and pent up demand has been further turbo charged by free money creating the perfect storm for activity to increase and for prices to skyrocket. When you can borrow money for less than 2% it’s hard to sit still; it burns a hole in your pocket. And, with money supply increasing and Central Banks encouraging inflation, it makes sense to borrow as much as you can and buy any asset that will inflate in value as cash erodes. Buying real estate is one of just a few safe options to create and protect wealth and an asset that makes a lot of sense in this environment.
The average price of all Residential Real Estate sold in August 2020: $634,409 – UP 21%
Average price of single detached homes: $734,427 – UP 18.9%
Average price of apartment condos: $386,972 – UP 16%
Average price of townhomes: $495,932 – UP 18.3%
Average price of semi-detached homes: $535,330 – UP 21.1%
Total number of residential properties sold in August 2020: 686
Single detached homes sold: 433
Condominiums sold: 79
Townhomes sold: 138
Semi-detached sold: 39
Average days on market: 16 (vs last year: 26)
The market is the opposite of what we envisioned 4-6 months ago.
A common question I get it: “Should I buy real estate? Prices keep going up but, they have to stop right? When will that be?”
Without a crystal ball I cannot answer any question with 100% certainty, but I do know that prices have never stopped going up when you zoom out. Look at it from the flip side: we have all heard our elders tell stories about what their money used to be able to buy; their favourite food or some land they had or their first car or their wages at a previous job. (I find myself referencing penny candies – especially now that pennies are non-existent and because I would grab my favourites and throw them directly on the counter at the gas station. And the cashier would touch every single one as they counted them out! And I did not care!) The point is that when you look back at what your money used to be able to buy you realize that it’s value has and will continue to decrease: it buys less and less OR rather, you need more and more money to buy the same thing you did in the past. This is the truth about Real Estate – especially in an environment where more dollars are being created out of thin air at break-neck speed. We need inflation – we need our assets to increase in value so that we can borrow against them to buy more stuff: “shop ‘til we drop” as they say. More people on earth every day, with more money, chasing the same stuff. The answer to the question about when home prices will stop going up: Never. And consequently, a more important consideration is that the value of money will continue to erode over time. So, when we look at appreciation numbers of 21% in a year it makes us ask the question: when will this end. We did it last year. And the year before. And, even though I’ve had no luck locating a crystal ball, I’m sure we will ask the same question again next year.