Lee Quaile
Broker of Record
Plenty can change over the course of a year – something we know all too well looking back from where we stand here in May of 2021. While entire aspects of our daily lives have been upended, with the increasingly rapid pace of vaccine rollouts we’re now able to see a return to normality a little more clearly on the horizon. But on the real estate front, some of the more unexpected aspects of the past year’s events seem set to carry on through and beyond the pandemic recovery.
A few weeks back, CMHC released their newest region-specific market outlooks for major residential centres across Canada. While not all forecasts should be taken as gospel-truth (you might remember last spring’s CMHC prediction of an 18% drop in average resale prices over the next 18 months and the panicked reaction it initially provoked among some observers), CMHC’s narrower, regionally focused market outlooks tend to be a little more reliable.
Last year’s prediction of a sharp fall in prices proved wildly inaccurate, but it was based upon a national average. Some markets across the country have undoubtedly suffered as a result of the pandemic, but here in Waterloo Region our resale market witnessed unprecedented gains in average sale prices across all property types and in every price range. Now, with the release of this latest and more focused market outlook, CMHC is calling for higher-than-normal average sale prices and a seller-friendly market to continue to be the norm in our region for the balance of 2021.
A few key themes that we’ve already explored over the past year form the basis of CMHC’s projections of continued market strength in Kitchener-Waterloo-Cambridge. These include an ongoing imbalance of supply and demand, continued net increases in intra-Ontario migration to Waterloo Region, the pressures of provincial stay-at-home orders on families and the resulting desire for more space in the household, and a strong and diverse local economy. CMHC does hedge on this position by emphasizing the important role of low interest rates in fueling the current high number of active buyers. Should interest rates remain low for longer than anticipated, prices and activity will stay elevated. On the other hand, if interest rates climb more quickly than anticipated (a real possibility given the emergence of inflation as a result of Federal Covid-relief programs and quantitative easing), market activity would drop to the lower end of CMHC’s projected range.
Additional points to emerge from this projection include an anticipated boost to new single detached housing starts over the latter half of this year and into next year to accommodate increased demand for family housing. Given the already large number of apartment-style multi-unit residential buildings already under construction or in development in our area, CMHC is predicting that the pace of similar new starts will begin to slow over the next two years as resources are directed toward the completion of these ongoing projects. Meanwhile, the local rental market is expected to remain tight, as housing prices force more people to postpone a purchase and rent instead – this has already been in evidence, with a vacancy rate of 2.3% already below the 10-year average. CMHC notes that this is also in spite of an increase in supply of purpose-built rentals in Kitchener-Waterloo-Cambridge these past several years. All of these signs point to a strong local housing market for the foreseeable future.
For access to a copy of the full report, please follow this link (and flip to Page 32 for our region). And if you have any questions at all, please feel free to reach out at any time!
