The Kitchener – Cambridge – Waterloo area recently proved to be an ideal market for buyers who wanted to make a short-term profit. Between 2015 and the spring of 2017, house prices grew very quickly in the area. In fact, from the first quarter of 2016 to the same time in 2017, the average sale price grew by 26%.
Our latest Housing Market Insight (HMI) for Kitchener – Cambridge – Waterloo takes a closer look at short-term sales and long-term investment activity from 2015 to 2018.
About 9% of transactions of homes available from 2015 to 2018 were involved in short-term sales
For this HMI, we looked at data for the period from the first quarter of 2015 to the second quarter of 2018. During that time, about 9.0% of all MLS® transactions and new builds that became available were involved in short-term sales. Some more highlights from the data:
- Both long-term investment activity and short-term sale activity followed the growth of MLS® prices closely. Both increased when prices accelerated, reaching their highest point at the same time as the average MLS® price (in the spring of 2017) (see graph, below).
- Kitchener accounted for a disproportionately large share of short-term sales and investment-related transactions over the period. While 45% of all transactions occurred in Kitchener, 53% of all short-term sales occurred there.
- The number of short-term sales near light rail transit (LRT) stations increased when average prices grew, and declined when average prices fell. This movement suggests that location near transit may have contributed to investment decisions.
- 1 in 5 addresses identified as a short-term sale or long-term investment were bought by a non-local buyer.
- We found evidence that, on average, non-local buyers were more likely to buy more expensive properties. Properties bought for a short-term sale or long-term investment by a non-local buyer cost an average of around $272 per square foot. This was 5.5% more expensive than the average for properties bought by a local buyer.
Most non-local buyers came from the Greater Toronto Area
We estimate that 72% of the non-local buyers mentioned above came from the Greater Toronto Area (GTA). The second- and third-highest sources of non-local buyers were Guelph and Hamilton, respectively.
CMHC has found that the growth of house prices in Hamilton and Guelph is tightly linked to that in the GTA. Prices may have risen sharply in many regions in the Greater Golden Horseshoe from 2015 to the first quarter of 2017. However, the relative affordability of the Kitchener – Cambridge – Waterloo area attracted investors and buyers looking to enter into a short-term sale at a lower price.