Despite uncertainty in the European and U.S. economies, the local housing market exhibited some minor gains in the month of July compared to 2010.
In the K-W area there were a total of 512 home sales through the Multiple Listing System of the Kitchener-Waterloo Association of Realtors, a 1.6 per cent increase over the 504 homes sold in the region last July.
The sales included 350 detached homes, 93 condominium units, 35 semis and 30 townhouses, and it was the third straight month of growth compared to last year’s numbers.
The president of the KWAR says that those increases, though small, could indicate big things in the overall market for the rest of the year.
- Advertisement -
“I think we’re looking at a very stable market here,” said George Patton. “I think we’re looking at consumers in this area who have good confidence in the economy and are prepared to make the major commitment to get into the housing market.”
Patton said that there were a number of factors leading to the increased confidence in the housing market and the economy compared to 2010. In June of last year the government implemented the HST and while it does not specifically apply to re-sale homes, he said that many potential homebuyers got into the market earlier in the year than usual to try and avoid the extra tax.
He also said that last year at this time the Bank of Canada was debating whether or not to raise interest rates, and while they did only rise one quarter of a percentage instead of the two or three points that many feared, it was another factor for the increased purchases.
In the first six months of 2010, the number of residential properties sold through MLS increased 16 per cent over 2009 and for the first time the value of those sales broke the one billion dollar mark at the end of June.
The 3,633 homes sold were also only 96 units short of the overall record set in 2007.
“This year, we’re not seeing that skewing because there hasn’t been anything in the market to drive that and so it’s evening out much better.”
Nevertheless, despite the small gains made in the markets this year over last, the numbers are still far off from the success earlier in the decade. Between 2007 and 2009, the region sold on average about 650 homes in the month of July – meaning the 2011 numbers are still about 20 per cent off from two years ago.
“Certainly it would be lovely to get back there, but will we get there? I really don’t know,” said Patton, adding that the increased sales in the spring have evened out the marketplace. There were a total of 667 residential properties sold in May, a 4.5 percent increase compared to May of last year and the third-highest on record.
He also said that there continues to be an active market place in the townships surrounding the cities of Kitchener and Waterloo, including Woolwich, Wellesley, Baden and Wilmot. That interest has been sparked by slightly cheaper housing given lower land prices in the townships compared to Kitchener and Waterloo, as well as larger lots. Plus the commute is not a major problem, he adds, saying that the “romance of the small community” is also a pull for some.
Patton did, however, note that the continuing economic problems south of the border that have carried over to European and Asian markets will likely have some impact on the housing market here in Canada.
“Any influences are always of concern,” he said of the current economic climate, but he is confident that the region has the economic diversity to withstand almost anything thrown at it. The diverse range of insurance companies, manufacturing, high-tech industries and even agriculture has made Waterloo Region a prime area for investment in the long-term.
“Yes, if I’m a buyer out there and I’m looking at the stock market, am I going to be concerned? Absolutely.
Am I going to think twice about it? Absolutely. But is my job secure and does it look like things are going to go well for me? Then I might buy, and it seems people are doing that.”
In fact, given Canada’s low interest rate of 1.25 per cent and predictions that it could drop even further as investors seek refuge in government debt, including Canadian bonds, now might be the right time to get into the housing market if you can afford to, Patton said, and as long as you have a secure job, a down payment in the bank, and not a lot of other debt such as credit cards or student loans.
Whether or not a home buyer can agree to a price for a home and a mortgage shouldn’t be tied to the interest rate that they’re getting, but to the circumstances of their individual life and the type of home that they can afford.
“You have to do the proper work. Get that in order, talk to a realtor, then go from there.
“If you’re comfortable with a number and it’s not going to keep you awake because you’re worried, than that’s the number you should live with regardless of where the interest rates are.”