Even people from Vancouver and Silicon Valley think K-W housing market is bonkers

The housing market in Kitchener-Waterloo has gotten so hot that even some recent transplants from Vancouver and Silicon Valley have remarked on it. 

In August, John Moon moved to Kitchener from Vancouver with his wife so she could attend a master's degree program at Wilfrid Laurier University. 

"Coming from an extremely hot housing market, I thought, we're going to be stepping into something maybe a little bit more economical, and we've seen that's not the case," said Moon, 39, who's renting at the moment near Victoria Park.

Amanda Brijpaul, 50, has found herself in a similar situation after moving with her family to Waterloo from California in July. 

"The pace at which the prices have grown here, I think outpaces Silicon Valley growth," said Brijpaul, who is also renting for now but plans to start house-hunting in earnest in the spring. 

"The inventories are shockingly low and the price acceleration is shockingly high."

Average cost of detached house hits $1 million

Last week, the KW Association of Realtors announced the average sale price of a detached house reached $1,021,353 in December 2021 – up nearly 35 per cent relative to the same time the previous year.

Similar price increases are being seen across the housing market. The realtors' association says that in December 2021, 

• The average sale price of an apartment-style condo was $500,352 – an increase of about 30 per cent compared to December 2020. 
• The average sale price of a townhouse was $717,475 – an increase of nearly 40 per cent.
• The average sale price of a semi-detached house was $770,246 – up about 34 per cent. 

It isn't just that prices are going up – homes that come on the market are also being snapped up very quickly. 

The number of months of inventory in K-W hit an all-time low of 0.2 in December, said KWAR.

That means, if no new homes were added to the market, it would take less than a month to sell them all, said Megan Bell, president of KWAR. 

"We really, really have a lack of supply," said Bell. "It's basically become a perfect storm. We've got low interest rates, no houses on the market, and it just keeps driving the price up." 

According to the latest Vital Signs report from the Kitchener-Waterloo Community Foundation, the K-W area had the second-highest price growth in Canada between 2015 and 2021.

The report noted that housing starts have not kept up with population growth, and that local home price-to-income ratios are now comparable with some of the most expensive cities in the world, exceeding New York and Boston. 

'How much can people afford?'

Bell said it's a tough market for everyone, but especially first-time home buyers. 

Richard Raghunath, 24, has been house-hunting for more than a year with an eye to buying a semi. 

He's bid on a few and has even been the highest bidder a couple of times – but said in those cases the sellers have turned him down, wanting an even higher price. As home prices continue to climb, he now feels he can't afford to bid on anything. 

"It's frustrating," said Raghunath, who's been living with family to save money for a down payment. 

"You always think, 'Well, how much can people afford? It has to stop somewhere,' but now that we've hit this million dollar mark for detached housing, I don't really see when it's going to stop." 

Bell believes higher levels of government should step in to give more help to first-time buyers, such as by increasing the amount they can receive through the province's land transfer tax credit. 

Another priority, she said, should be to cut through red tape and make it easier to build new homes. 

Martin Asling, with the group Waterloo Region Yes in My Backyard, believes the region also needs to prioritize the development of multi-residential buildings, even in neighbourhoods that have historically been geared toward single-detached houses. 

"We'd ... like to see apartment buildings — even of six storeys — throughout the city," said Asling, who noted the region also needs more social housing. 

'Crossing my fingers'

As for Raghunath and Moon, they're starting to reassess their future plans. Raghunath is thinking about joining forces with a friend to buy a house together, or widening his search to include homes outside the region. 

Moon said he and his wife will have to think carefully about where to put down roots once she finishes her master's program. 

"Certainly, I'm not going to stay here if housing prices … keep going up like this," he said. 

Brijpaul, meanwhile, is settled in the region and still plans to start looking for houses next year. She's hoping for the best. 

"[I'm] crossing my fingers. And crossing my toes," she said.