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October Roundup – Southern Ontario Real Estate Still Performing

As interest rates rise, Canadians are finding it more expensive to borrow funds and take on loans. The rate stands at 1.75% – the highest it has been in ten years – and the local mortgage industry is feeling pressure.

Compared to the same time last year, the median price of all residential properties sold in October 2018 saw an increase of 6.5 percent. Rising construction prices and stringent mortgage rules are additional factors also contributing to this trend. However, the high borrowing rate has proven to be the real back-breaker.

While the real estate industry all over the country is facing its pressure, a few markets like Southern Ontario, are performing better than most.

The Rise in Sales

Despite all the market reports that are suggesting a tightening up of market due to high prices, the figures from Kitchener-Waterloo, based in Ontario, suggest that sales are on the rise.

According to statistics presented by Kitchener-Waterloo Association of Realtors, their agents sold 514 homes in the month of October. These sales were made through the Multiple Listing System (MLS) and  saw an increase of 7.8 percent, compared to last year.

There has been an increase in the sale of almost all types of homes, including detached homes, condominiums, and freehold townhouses. Interestingly, the sales figures for semi-detached homes suffered the most as a direct result of the factors surrounding the market at this moment, down by 18.2% from last year.

The highest performing market however, remained that of the London, ON region. Despite an 11-24% hike in prices, the city remains one of the most affordable, and desirable locales in terms of buying property. Almost similar reports are emerging from the Brantford area too.

Higher incomes and stable finances factor into the burgeoning strength of the real estate industry. The Ontario region’s high median incomes have helped to keep the markets stable, especially when compared to what’s happening in the rest of the country. In Brantford, for instance, a strong, food-processing industry alongside companies like Ferrero – the maker of popular products like Ferrero Rocher Chocolates, Tic Tac, and Nutella – are an integral part of the local economy.

With low unemployment rates and slow inflation, the city boasts some of the most affordable homes in the country. According to a report by Money Sense, a house that would cost around $720,000 in Mississauga, would only cost about $420,000 in Brantford. The prices have increased, but steadily.

High Affordability

Plentiful job opportunities are the biggest selling point of the region of Southern Ontario. Fertile land and a good river system, along with an excellent, industry-led economy have created numerous avenues for financial and personal growth..

This is reflected in the average income of the region’s cities as well. For example, in the city of East London, the median income is $62,011, about 46% higher than what is required to qualify for a mortgage. Similarly, an average-priced home in Strathroy costs about $354,854, while the average income stands at $66,123. This data suggests that the average buyer in Strathroy makes 37% more than what they need in order to qualify for a mortgage.

Therefore, while more people have been buying homes, rising incomes have allowed Ontarians to keep up with increasing prices and rising interest rates, thus ensuring continued affordability in the real estate market in the region.

 

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