Mortgage and Real Estate Market Update – Fall 2022

We’re heading into the colder months now and a lot of homeowners and borrowers are wondering if they will be able to afford to own a home with the global cost of living rising and September’s coming rate hike. Our Kitchener mortgage broker team has been busy keeping an eye on the market.


Housing Market – Fall 2022

July brought a hike in interest rates and we are going to see another one in September. However, many experts feel this will be the last rate hike for this cycle. The Waterloo region saw a drop in sales prices for residential properties in July at $752K, down 1.2% from July 2021. July’s rate hike saw the housing market begin to slow down, making the market a less extreme seller’s market that we have been experiencing since the pandemic.

Detached homes had an average price of $842K for the region, down 7.0% compared to last month and down 6.0% from last year. Semi-detached homes had an average price of $661K, down 5.4% from last month and up 1% from last year. For townhouses, the average price is $643K, down 3.3% from last month and up 3.6% from last year. Condominium prices were up 4.1% at $522K from last month and up 20.4% from this time last year.

Average sales prices for the region saw a drop of 41% in semi-detached properties, a 39.3% drop in condo sales, a drop of 32.9% in Townhouse sales, and a drop of 30.4% in detached home sales.


Other Areas

Looking at figures for the Ontario region for August, the average home price was $831K, remaining the same from this time last year. The Greater Toronto area saw a rise of 1% in home prices at $1.02M, and no change in the City of Toronto with home prices remaining at $1.02M. In Ottawa, the average home price was up 4% at $646K from this time last year. Mississauga saw an 11% increase at $1.07M, Brampton was up 2% at $1.03M, and Hamilton was up 2% at $793K.

Ontario’s average sold price for the month was down 6% at $831K compared to last month, down 16% from last quarter, and down 0.49% from this time last year.


Mortgage Market

We have seen how interest rate hikes are pushing the cost of homes up, making it harder for many to get the financing needed to buy a home. Currently, with a mortgage of $400K, a 5-Year Variable rate mortgage has a 3.50% rate and a 5-Year Fixed mortgage has a 4.34% rate. To pass the stress test for an insured mortgage, you need to be able to afford payments at a rate of 5.25%. For an uninsured mortgage, it’s 6.55%.

The Bank of Canada will be raising rates once again in September, but experts feel this will be the last rate hike for this cycle. Experts are expecting a hike of 75 bps for September, which would leave the overnight target rate at 3.25% through 2023. It is predicted that the average 5-year bond yield will be 2.45% for the remainder of 2022 and 2.3% for 2023. Right now we have a generation of borrowers in Canada who have never had to deal with such high costs.

Many are holding their breath as we move into the colder months because of the rising cost of fuel and the cost of living globally. Homeowners may find it hard to keep on top of monthly payments, however, we will have to wait and see what the coming months will bring our way.

If you want to know what mortgage rates are available in the Kitchener region, give our expert Kitchener mortgage broker team a call today!

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