Real estate prices expected to fall in Kitchener-Waterloo area next year: Re/Max report

FILE - A "for sale" sign hangs from a post outside of a vacant business building in Belleville, N.J., Thursday, May 3, 2018. T. AP Photo/Julio Cortez

A new report from Re/Max Canada predicts that average housing prices in the Kitchener-Waterloo area will continue to fall into next year.

The real estate firm released its fall housing market outlook on Tuesday which predicted that average prices would fall between two and 15 per cent next year.

Read more: Recession fears put housing plans on hold for 41% planning to buy or sell: Re/Max

It noted that the average price of a home in the area was $868,078 over the first 10 months of 2022, and that number is forecasted to drop to $815,993.32 next year.

There are three types of markets in real estate, balanced, buyers, and sellers, according to the Real Estate Board of Greater Vancouver’s website.

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It says that a balanced market essentially occurs when supply is in line with demand, leaving real estate prices climbing in line with inflation.

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According to Re/Max, the Kitchener-Waterloo market is among the 40 per cent nationwide which are considered to be balanced by the report, which expects it to remain the same next year.

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The balanced market in Kitchener falls in line with most of southern Ontario including the GTA, Windsor, London and Kingston.

Nationally, the report says that the average prices nationally are expected to fall 3.3 per cent, with a large portion of the decline coming from Ontario and some parts of Western Canada.

This continues a trend which began in March, as the Bank of Canada began to raise interest rates to target inflation.

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The price drops are not expected to drop until the Bank of Canada stops raising interest rates, or moves to hikes of 0.25 percentage points.

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“I think you’re going to see buyers take advantage of that in a big way,” Re/Max Canada president Christopher Alexander told Global News’ Craig Lord.

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He also noted that continued rate hikes by the Bank of Canada will ultimately dictate when the decline in home prices will come to an end.

There was a “slight uptick in sales” in October, according to Alexander, but it is too early to say if this is a trend or an aberration.

There are many buyers and sellers who are currently staying out of the housing market until the Bank of Canada slows the rate hikes, Alexander said, but he believes this will have to change at some point.

“On both the buy and sell side, you’re going to reach a point of, ‘I can’t wait anymore,’” he said.

“People have babies, they get married, they get divorced and life happens. And so that can cause people to come off of the sidelines.”

— with files from Global News’ Craig Lord

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