Canadian Real Estate Magazine article

This article appears in the May issue of Canadian Real Estate Magazine and is written by our own Mike Milovick.

Prospering in K-W

The start of 2009 has been very intense for me and my team – probably even busier than the record 2007 levels. I focus on income property in Waterloo. Kitchener – Waterloo- Cambridge is considered the province’s hot area with a lot of investor interest – in Waterloo especially, as it seems to be particularly well – insulated.

Although residential valuations have dropped somewhat from the previous year (4% in K-W), income property there remains in strong, strong demand. Our team is seeing lots of activity below $500,000 – and we believe this will continue.

From a statistical perspective, the upper half of the Waterloo market (properties of slightly more than $1 million) is still frozen due to the worldwide credit crunch. In fact, of the 39 that are currently on the market, the median price is $1.05 million and the average list price is $514,000. The issue isn’t a shortage of buyers, it’s a shortage of commercial money. Buyers are ready to buy, sellers are willing to sell, but there’s a shortage of financing.

Waterloo’s multi-family MLS sales year -to- year:

• 2009: 10 sales, multi-family, averaging $292,900, 71 days on market and selling for 95% of list
• 2008: 15 sales, multi-family, averaging $250,000, 20 days on market, selling for 97% of list

So sales are down 30%, prices are up 17% and properties are on the market 3.5 times longer than in 2008.
For income property, Waterloo is actually faring much better than any other areas in Ontario. I would have to think that a 17% increase in price seen in our marketplace relative to the same time a year ago is going to be tops, nationally.

For new clients coming in, they recognize that Waterloo is arguably the best spot in Ontario to park their money. However, buyers also feel that valuations should reflect the downward pressures felt in other cities. This isn’t the case. Buyers are quite amazed at the rigidity of sale price to list price ratio still seen.

Without a doubt, Waterloo income property and – in my opinion- student properties still represent the best opportunity in this market. Both universities are increasing enrolment. With small price declines seen in residential valuations, perhaps the best real estate strategy in Ontario is student housing in Waterloo.

Source: Mike Milovick, sales representative, Prudential Grand Valley Realty, Brokerage, Waterloo, Ont.