What will be the impact of COVID-19 on the Kitchener-Waterloo real estate market?

Kitchener-Waterloo is the poster child for ‘tech hubs in smaller cities.’ To fully understand the impact of COVID-19 on the Kitchener-Waterloo real estate market, you need to pay attention to the effect of the pandemic on real estate in Canada, alongside the special characteristics that stand the “twin cities” out.

In Canada, COVID-19 has become a key factor for the real estate market due to a constellation of factors like increased unemployment rates, low Canada prime rate, and reduced influx of immigrants into Canada. However, the real estate market in larger Canadian cities could feel the larger brunt of the pandemic’s effects.

Meanwhile, some smaller cities are thriving. With a population of over 400,000 individuals, located to the west of Toronto and within a 1.5 drive from the GTA, Kitchener-Waterloo has become one of Canada’s top technology hot spots. The concentration of tech start-ups in this region in addition to the two universities there is causing its real estate market to boom!

Here are some specific ways the Coronavirus pandemic has affected the real estate market in Kitchener-Waterloo:

1. Impact of COVID-19 on the Kitchener-Waterloo’s Job Market  

Although COVID-19 has taken its toll on the job market, leading to a rise in unemployment, even in Kitchener-Waterloo, it is exciting to note that technology jobs have been relatively safe! This means the Kitchener-Waterloo region’s job market is performing relatively better than many other Canadian cities. Known as the home of Blackberry, the growth of technology companies here has also stalled the otherwise adverse impact of COVID-19 on this Canadian city.

2. Impact of COVID-19 on the rental market of Kitchener-Waterloo

The only major issue regarding the Kitchener-Waterloo housing market is the decrease in the demand for rental units. Unlike the job market, the rental market in the Kitchener-Waterloo area has been significantly affected because of the decrease in the demand caused by remote learning. 

Most Canadian universities, including the university of Waterloo and Wilfried Laurier, have shifted their classes online for most programs and consequently many students who normally rent a room in the city in the school year, now participate in the classes from their hometowns.  This means that many investors may expect lower cap rates for their real estate investment at least for 2020 and 2021.

3. General Market Liquidity

The Government of Canada has pumped in hundreds of billion dollars via the COVID-19 Economy Response Plan to stimulate the economy within the last couple of months. A notable program is the Canada Emergency Response Benefit which incorporates emergency wage subsidy for businesses.

Due to this influx of monetary stimulus, capital is available for different purposes, and while a huge part of the money will go towards regular household purchases, extra capital has been freed up for investment. Unlike the United States, the stock market in Canada is not very hot, and people would rather invest in the leveraged real estate market.

4. A Hotter Real Estate Market in Kitchener-Waterloo

Since the beginning of this pandemic, phrases like ‘physical & social distancing’, ‘work from home’, ‘wear your mask’ have become very common globally, with crowded gatherings gradually becoming a thing of the past. While people don’t want to stay completely away from city centres, they still want to live far enough to be able to maintain boundaries that have been necessitated by the pandemic.

A city such as Kitchener-Waterloo is likely to become very popular and much hotter, as it is only 1.5 to 2 hours’ drive away from Toronto! It is just the perfect place to live, as residents can avoid living in rowdy areas of the Greater Toronto Area and live in this calmer neighbouring city. At the same time, it is still close enough for a quick drive by or for visitation.

In fact, many remote workers are considering living in Kitchener-Waterloo while working in Toronto (and visiting the main office only once in a while, as the majority of the work is done from home). It is also an attractive area to live in for white-collar-job couples, if one-half of the couple works in Kitchener-Waterloo while the other works in the Greater Toronto Area.

Home prices are also very affordable in this city, and when all the other factors add up, this might be what seals the deal for many Canadian residents moving to Kitchener-Waterloo.

In summary, the factors in favour of Kitchener-Waterloo’s real estate market becoming hotter include: its booming tech industry, proximity to the Greater Toronto Area, Kitchener relatively low property tax and finally, the affordability of housing in this exciting area. 

Conclusion

• Although many white-collar jobs have been lost in Canada due to COVID-19, technology jobs have kept the Kitchener-Waterloo job market afloat. With more technology and innovation, this region is expected to thrive, during and after the pandemic.

• Extra cash influx by the Government of Canada to stimulate the economy will likely be invested in real estate. Kitchener-Waterloo is a very attractive area for these investments.

• Since housing is very affordable here, it is attractive to remote workers who have offices in Toronto and couples who work in Toronto viz-a-viz Kitchener Waterloo.  

• Kitchener-Waterloo is a perfect city to live in post-pandemic; while it is only a 2-hour drive from Toronto, it still maintains its serenity and allows for adequate physical distancing measures.

• Try to make the right decisions in your real estate journey by hiring one of the top real estate agents in the Kitchener-Waterloo area.