Isaac Newton famously said, “What goes up must come down.” It seems this rule may not apply to the Cambridge, Ontario real estate market which just experienced its 25th consecutive year of rising house values. It has been a quarter century since Cambridge has experienced a year-over-year decrease in average sale prices. It’s an amazing statistic, obviously very positive for existing homeowners, but is not without a downside.
Housing affordability is declining, even with continued low interest rates. Last year average home prices jumped 7% and 8.9% for freehold and condominium properties, respectively, outpacing income gains by a wide margin.
Housing supply and demand are also a challenge, particularly for buyers. With fewer homes on the market, bidding wars are once again becoming the norm, especially in the low-end of the market. It is becoming increasingly difficult for young people to purchase a home without having to fight for it.
The number of residential sales spiked by 10% in 2019, while the number of listings increased at only half that rate, or 4.9%. As of the first of this year, there were just 107 active residential MLS listings in the city of Cambridge. That’s nearly 50% less properties for sale than the year prior.
Given continued low interest rates, the tight housing supply and continued strong demand for homes fueled by healthy immigration, we expect real estate prices to rise again in 2020, barring any unforeseen government intervention.
Listings and sales activity are anybody’s guess. Some would-be sellers may hold tight in anticipation of further price gains, while others may delay listing if having difficulty finding a suitable alternative property. One thing is for certain, when a home hits the market in 2020, there should be no shortage of potential buyers.
We at Dyer Realty recognize real estate is a historically safe asset. Homeowners should expect their property to provide not just a roof over their head, but financial security due to long-term value growth. Even with the challenges described above, with a long-term ownership horizon we consider the purchase of a home in Cambridge to be an excellent investment.