Mortgage and Real Estate Market Update – Fall 2021

Mortgage and Real Estate Market Update – Fall 2021

The third quarter of 2021 is nearly over and in many markets across Canada, we are starting to see things slowing down. However, we aren’t yet out of the woods when it comes to Canada’s housing market crisis. Many people are waiting to see how the housing market will be affected by continued Covid cases as we enter flu season, by the Federal Elections, and the ongoing inventory shortages. Our Kitchener mortgage broker team has the latest update for Canada and the Kitchener, Waterloo, and surrounding areas.


Housing Market Update for August 2021

In July, we had a dip of 3% in Canadian home sales, with average home prices at £662K. We also saw a slow down in both house price and house sales compared to a few months back. August makes this the 4th consecutive month that has had a drop in the average sales price of homes and the number of homes being sold. Things are slowly going back to how they were before the Covid pandemic began, however, this doesn’t mean that things are back to normal. At the moment about 2/3 of the housing market across Canada is seeing a drop in sales.

Ontario seems to be doing better than some areas and, despite the impact of Covid and has had sharp rises in the housing market over the past 18 months. Over the past 4 months, things started to become more stable and the market has been cooling down. 

The Kitchener-Waterloo areas have seen a bit of a drop in the past 2 months where homes sales were concerned, but the demand for homes is still strong. These two factors have kept home prices ticking along. Last month saw a drop of 17% in sales compared to where things were last year at this time. 

The Waterloo region particularly has been one of Ontario’s hotter competitive markets due to very low inventory levels. Residential sales for detached homes were down 27.1%, condos were up 30%, semi-detached homes were down 4.2%, and townhomes were down 11.8% compared to this time last year. 

The average sales price for homes in the Kitchener-Waterloo area is $756K, a rise of 18.2% from last year, but a dip of 1.4% compared to last month.

It looks like July was a time where the market took a breather due to everyone being able to come out of lockdown and families going away on holiday. Experts do feel the market will pick up once again as we move into Autumn, continuing to favour sellers. 


Housing Market Crisis

Not everyone is happy about the rising home prices though. Waterloo City Hall was recently the site of a sizeable demonstration of residents who are voicing their concerns about the state of the housing situation across the country, calling for decisive action to take place to fix the housing crisis. 

One of the biggest concerns is that homes are being snapped up by commercial investors, even outbidding millionaires of homes. It’s a situation that the average homebuyer can’t compete with. There are homes being bought as investment properties that are either left standing empty or being used for short-term rental, leaving those who are looking for a home to live in with not many options.

Experts also point out that low-interest rates have played a role in the housing issue, allowing borrowers to take on large mortgages to buy more expensive properties. Interest rates were already low prior to Covid. The Bank of Canada put measures in place and lower rates even further during the pandemic as a way to help stimulate the economy, with interest rates at a historic 0.25%.

With the economy starting to pick up and inflation rising, experts are predicting that the Bank of Canada will start to raise the key interest rate by the 2nd quarter of 2022, which would slow the market down. 

Another big issue is that enough homes aren’t being built to cover the need/demand. Between 2016 and 2019, before the country closed its borders as a means of stopping the spread of Covid, Canada saw nearly 1 million people immigrate and became residents. It is believed that this is part of what has fuelled the jump in demand for homes throughout the pandemic. Not enough homes were being added or built to cover the demand. 


Many still have a “sit and wait” mindset, waiting to see how the housing market will be further impacted in the months ahead. If you have questions about current mortgage rates and what options are available to you, give our Kitchener mortgage broker team a call today!

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