…its report does not reflect the reality on the ground in Southwestern Ontario

 

The Canada Mortgage and Housing Corporation missed the mark with its latest projection, at least so far as Waterloo Region’s housing market is concerned.

In prepared remarks delivered to the House of Commons Standing Committee on Finance one week ago, CEO Evan Siddell made waves in the Canadian media and real estate worlds by stating that CMHC is forecasting average housing prices in this country to fall by as much as 18% over the next year.  Any such development (if it became reality) would of course be terrible news for homeowners, and particularly for those who bought in recently at the peak of the market.

I had considered opening this article up by branding the CMHC report as irresponsible fear-mongering, but I do recognize the challenges inherent to an organization which governs such a diverse and wide-ranging (both geographically and economically) market as Canada’s. Fortunately for us here in Waterloo Region this projection simply doesn’t pass the smell test – there is little connection between this catastrophic prognosis and the quantifiable realities of our local market.

CMHC can be an invaluable source of information – if you use it appropriately. There are highly regionalized tools and reports available on their website which can lend you fantastic insights when you know where to look and how to apply the data.  But at the other end of the spectrum are incredibly broad reports which simply average data out across the entire country.

When we look at a projected decrease in housing prices of between 9-18%, we must remember that this is a national average which gives just as much weight to housing markets which had been devastated even prior to COVID-19 (Fort McMurray or Calgary, anyone?) as it does to highly prosperous and surging markets, like Kitchener-Waterloo.

As I’ve outlined time and again, I remain confident and bullish on the Kitchener-Waterloo market for a variety of reasons: massive recent investments in infrastructure, an ongoing condo boom, the presence of two world-class universities and the rapidly expanding and innovative Conestoga College, and our diverse and growing economy. Even at the height of the COVID-19 related shutdowns earlier in April, close to 70% of our workforce was reported to have still been working, either in the essential services sector or remotely from home.

People are still following available jobs into our growing community, and these same people are still looking to buy homes and put down roots in Kitchener-Waterloo. In fact, the most recent – and very localized indeed – market statistics released by KWAR earlier this month demonstrated a 7.3% increase in average sale prices over the same time in 2019. This is even taking into account the fact that COVID had already been a fact of life here for six weeks by that point. As I’ve made clear, from all of the data I’ve reviewed and from the realities I’ve observed as a working Realtor on the ground here in Kitchener-Waterloo, prices are holding steady in our market, and resale turnover is carrying on at a good (albeit reduced due to COVID-19) rate.

While I genuinely believe that homeowners in Kitchener-Waterloo can rest easy in knowing that we will not be facing anything like the 9-18% value drops forecast in the broad CMHC report, I do have one word of warning for anyone who is moving forward with buying a home here in the next several months. The kind of institutions that do take every word from the mouth of CMHC as gospel are the big Canadian banks. They will look upon this report with apprehension, and I anticipate that we will see them react defensively – tightening up lending qualifications and increasing the requirements for due diligence before approving folks for new mortgages. So – if you’re planning on buying a home soon, make sure to discuss including a strong financing condition in your offer with your Realtor. We’re already seeing the resurgence of conditional deals here on a local level, and I feel that prudence is warranted in this respect.

These are challenging and novel times for everyone, but I strongly believe that nowhere else in Canada is better equipped than Kitchener-Waterloo to safely navigate the next 12 to 18 months. Watch for our region to buck this negative trend and emerge as strong as ever on the other side of COVID-19.