WATERLOO — When it comes to housing in Waterloo Region, David Harmes and Danielle Deveau got in on the ground floor, so to speak.
In 2013, the couple purchased their home in Kitchener’s Cherry Hill neighbourhood — a desirable, walkable part of town, planted right in the middle of downtown Kitchener and uptown Waterloo. The couple left Toronto when Harmes was offered a job in Kitchener; reasonable house prices also gave them motivation to move.
“It was shocking,” Harmes says. “A three-bedroom house in Kitchener was cheaper than a condo in Toronto, which is exactly what we were moving from.”
Home prices in Kitchener-Waterloo remain well below what buyers in Toronto would expect to pay, but for new entrants to the market, the bargains are rapidly disappearing. “By the time we moved in, in July 2013, we started hearing stories from everybody about the competition,” Harmes says. He believes his house has increased in value by 40 per cent since the purchase date.
According to local real estate agent Darryl Watty, the going rate for a single detached home in Cherry Hill today is $400,000 on average, and these homes don’t tend to stay on the market for more than 10 days. Despite the market cooling slightly in the first quarter of this year, the price of an average detached house in Kitchener-Waterloo stood at $582,000 in March.
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The residential real estate market may be stagnating in the rest of Ontario as a whole, but in Kitchener-Waterloo, prices are holding steady after a booming 2017 — and that’s bringing big-city housing problems including bidding wars and longer commutes to a region with fewer than half a million residents. Homes often sold over asking price, and within a matter of days instead of weeks. The cost of a home jumped by 21 per cent over the course of last year. At the peak, last May, the average house price briefly touched $500,000 — that might sound modest to veterans of the Toronto housing market like Harmes and Deveau, but it represents a 40 per cent jump over the previous year. An entire 188-unit condo project was put on the market and sold out in two days. Swaths of semi-detached homes were erected at the edge of town, running into neighbouring rural communities.
Tony Schmidt, president of the Kitchener-Waterloo Association of Realtors (KWAR), says there’s debate and conflicting data around what exactly is keeping Kitchener-Waterloo house prices aloft. Most likely, it’s a combination of low financing rates, people moving from Toronto to escape its punishing real estate costs, and the fact that a growing technology sector and healthy post-secondary institutions have fostered a strong local job market and low unemployment rate. As well, inventory levels — the number of houses available to buy — are quite low compared with the demand, Schmidt says. In March, 792 homes were available for sale, compared with a 10-year average of 1,424 per month.
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Whatever the causes may be, Kitchener-Waterloo’s housing crunch is forcing home buyers to manage their expectations and rethink their dreams.
“People can still buy a home,” says Schmidt, but “they might need to adjust what they deem a suitable first home to be. Maybe it’s a townhome instead of being detached.”
Watty agrees that a detached starter home may be a vanishing possibility for many buyers in Kitchener-Waterloo. “Not long ago, someone would come into the market with $250,000 and a good realtor could hustle to find them that dream single-detached home they wanted. That’s not even really a consideration today,” he says. “For anyone still looking for that white picket fence and room to grow, they’re looking at $475,000, at least.”
Kitchener-Waterloo’s desirable neighbourhoods have migrated. While suburban Beechwood and Forest Heights still hold some clout for the family-focused buyer, walkable Central-Frederick and downtown Kitchener (where homes tend to be older) have a new found popularity.
Some people are finding themselves priced out of town altogether. For Ryan Huckle, the solution to Kitchener-Waterloo’s housing boom was the classic “drive until you qualify” strategy — in other words, finding a home outside of town so that he could afford something big enough for him, his fiancée, and the family they hope to have one day.
“We have dogs, so we needed a decent-sized back yard. And we’re planning on having children, so we needed a place we could grow into,” says Huckle, who has a master’s degree and the student debt to prove it.
Huckle works full time at Conestoga College and part time bouncing at a bar. While most of his social and professional life is based in Kitchener-Waterloo, he and his fiancée are getting ready to move 40 minutes south to Paris, Ontario, population 12,000. The tiny town sits on the Grand River, and, like a lot of small, Ontario towns, was developed along a picturesque downtown strip featuring old brick storefronts that are now filled with boutique clothing shops and specialty cafés.
Even looking outside of town, Huckle faced some competition before buying his home last month. He felt lucky to land a raised bungalow on a large lot with six bedrooms, though he put in an offer on another home — the ideal option — before losing out to another buyer. “The place we managed to buy was listed Sunday, we saw it on Monday and we put in our offer Tuesday,” he says. “We definitely aren’t the only ones looking outside of the city … It still felt like anything well under $500,000 needed a lot of work, especially if you wanted to have more than two kids.”
Watty has some philosophical advice for buyers priced out of the detached housing market in Kitchener-Waterloo. “Realistically, a family could live in a two-bedroom, one-bath condo. Everything else above that is lifestyle,” he says. “Do you want to have barbecues? Do you want to walk to coffee shops on Saturday mornings? In this market, when you’re trying to outbid [another buyer and] you’re not getting a deal, you better know why you’re spending more money.”
This spring could be an opportune time for buyers, as prices have levelled out compared to the surge in 2016 and 2017. According to the KWAR’s March update, the average sale price of residential properties decreased by 0.7 per cent over last year. Detached homes, semis and townhomes are all hovering around last year’s prices; only apartment-style condominiums are still booming — up 11.3 per cent year over year, they’re selling for an average of $298,361.
Schmidt says the market right now is “not quite as frantic,” as it had been, and “there are more opportunities for buyers to make good, informed decisions with their realtor.” That said, he also notes in the most recent market update that “we are still deep in a sellers’ market and not expecting that to change for the remainder of the year.
“And while 2018 won’t be quite as hectic as 2017, the market is going to be demanding.”
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