CMHC: Kitchener Waterloo Real Estate Market Still Hot

By Benjamin Bach, the Wealth Team on May 21, 2010 in Featured Articles, kitchener waterloo

CMHC just released their Housing Market Outlook for Kitchener Waterloo, Cambridge & Guelph (and surrounding area). The highlights are:

- Sales will continue at a strong pace through the fi rst half of 2010 before moderating later this year and into 2011.
- Low interest rates, population growth and a slightly better job market outlook will support housing demand through 2010.
- New home construction will increase signifi cantly in 2010, but will remain below levels recorded between 2000 and 2005.
- Listings will respond to increasing home prices resulting in more balanced markets by 2011.

Kitchener Waterloo Real Estate Market Strong in 2010

Homebuyers returned to the market in 2010 due to the low mortgage rates and many have brought their home purchases forward in anticipation of the increase in mortgage rates in the

second half of 2010 and into 2011. Affordability will continue to play a major role in the strong level of sales through the spring and summer this year, but will slowly erode later this year and into 2011 as both as an increase in mortgage rates and higher prices combine to boost the

cost of home ownership. Moreover, the pool of potential fi rst-time buyers will diminish as this segment remains very price sensitive. Many were able to enter the market when mortgage

rates dropped in early 2009 and completed their purchase in the latter part of 2009 and early 2010.

CMHC had some interesting commentary on mortgage rates in Canada too:

With the overnight rate expected to increase in the coming months, mortgage rates have begun to rise. According to CMHC’s base case scenario, posted mortgage rates will gradually increase throughout the course of 2010, but will do so at a slow pace. For 2010, the one-year posted mortgage rate is assumed to be in the 3.6-4.8 per cent range, while three and fi ve-year posted mortgage rates are forecast to be in the 4.2-6.7 per cent range. For 2011, the oneyear posted mortgage rate is assumed be in the 5.0-6.0 per cent range, while three and fi ve-year posted mortgage rates are forecast to be in the 5.6-7.2 per cent range.

Rates could, however, increase at a faster pace if the economy recovers more quickly than presently anticipated. Conversely, rate increases could be more muted if the economic recovery is more modest in nature.

Ancedotaly, Kitchener Waterloo’s real estate market is still red hot. My friend Linda just sold a home for her clients in twenty-two (22!) hours, in multiple offers, for $7000 above asking price.

If you want a full copy of the CMHC report, send me an email, and I’ll send you the PDF in full.