RE/MAX Forecast for Kitchener - Waterloo, 2010

Despite jobs losses in the manufacturing and automotive sectors, home buyers in Kitchener-Waterloo continued to make their moves in 2009. Purchasers ventured into the market with cautious optimism as early as April, taking advantage of record low interest rates and buyer’s conditions. Pent-up demand has also helped fuel momentum, as fence-sitters moved off the sidelines and into the market. First-time buyers led the charge for single family homes throughout much of the year, with some moveup activity reported during the latter half.

Several factors have helped prop up demand in Kitchener-Waterloo over the past year. Affordability continued to be a primary factor, as savvy buyers took advantage of a favourable real estate climate and a good selection of inventory. Th e city’s resale house prices continued to attract out-of-town purchasers from across the Golden Horseshoe, who realized their money will go quite a bit further, as

well as families of university-bound students who opted to invest in the local housing market versus seeking out rental accommodation. Th e city’s tight vacancy rate—at 1.6 per cent—has also factored in, prompting many to consider the benefi ts of homeownership. That trend is expected to continue into 2010.

Kitchener-Waterloo’s widely diversified economy has also helped off set some of the downturn in manufacturing, particularly with its thriving high-technology and education sectors. An expanding population, urban growth and revitalization across the entire Waterloo Region are positive variables supporting the resale residential segment going forward. By year-end, Kitchener-Waterloo should fi nish out the year three per cent ahead of 2008 levels at 6,300 units, while average price is expected to climb two per cent to $260,000.

While unemployment topped nine per cent in 2009, economic fundamentals are set to improve next year. The manufacturing sector is forecast to progress, in tandem with ongoing recovery south of the border. Some sense of stability, although tentative at present, has finally emerged in the turbulent automotive sector, with sales showing modest improvement.

Over 2,000 well-paying job opportunities now exist in the area’s high technology sector. While a skill mismatch has left many positions vacant, the outlook is good as those jobs are filled over the next several years. To that end, there has been significant investment in skills training into the community and in the area’s post-secondary educational institutions.

Given a more positive economic performance forecast for 2010, combined with demand that has been rising steadily in recent months, the Spring market is expected to be very strong. Th ere has already been a firm transition to balanced conditions. Days on market have fallen 16 per cent to 46 days, and are expected to hold steady. Move-up buyers have become increasingly active, trading up to larger, better located homes, and will be a greater force in the marketplace next year.

With a good supply of inventory and softer prices in the upper end, sales are expected to improve next year, as opportunities may prove too enticing to resist. Investors will also play an increasing role in 2010. Revenue properties are currently being snapped up almost as quickly as they become available, with great interest from Toronto-area purchasers.

Overall, sales in Kitchener-Waterloo are forecast to experience a modest upswing, reaching 6,500 units. Average price will trend upwards once again, rising three per cent to $267,800.

 
 

Information courtesty of RE/MAX Housing Market Outlook, 2010