KW Rental Market Overview for Early 2020
The KW Market
Kitchener-Waterloo has been growing more and more over the past years. Our city is developing, becoming more metropolitan, and offering more to residents each day, which is exciting to see.
However, you can’t have growth without growing pains. In the case of the rental market, Kitchener-Waterloo is seeing rising prices, and increasing competition.
According to CMHC, the primary growth factor is people moving into the region. People seem to really enjoy KW and the opportunities it provides. This means that more and more rental units are demanded, which drives up the price as supply falls short.
This brings us to the start of 2020, and the question of, “what can renters expect?”
When it comes to renting in a competitive market, the most important thing is to be informed and prepared ahead of time. While it doesn’t make the environment any less difficult, preparation is key to successfully navigating the challenges ahead.
In this article, we’re going to dive into the KW rental market and see where the prices are at, what the trends have been over time, and finally, explore the distribution of price ranges so that we can better understand what’s going on in the city.
Prices Over Time
The first thing we should look at is the average trend over time, so that we can get some context. This graph shows the median rental price in KW, tracked since the beginning of 2016.
The averages are calculated quarterly, with each point representing the end of the quarter. For example, the value shown for the beginning of July is the average of April, May, and June.
It’s also worth noting that this is the median value. Medians show the exact middle of the price range. This means that the prices shown approximate what a “middle-of-the-road” rental would cost for each time frame, making it a good reference point to start with.
We can see that both house rentals and apartment rentals have been steadily going up over time.
Breaking it Down
While it’s helpful to see the overall trend, there are many layers to the market and different people will be on the hunt for different types of properties.
We’ve found that a primary decision factor is the number of bedrooms because it directly relates to people’s lifestyles and the sizes of their families (if applicable).
This graph breaks down the 2016 – 2019 data by number of bedrooms. Here we can better see how the market is segmented.
- All sub-types seem to be on an uptrend:
- 1 Bedroom rentals have gone up a total of 17.5% since 2016
- 2 Bedroom rentals have gone up a total of 16.6% since 2016
- 3 Bedroom rentals have gone up a total of 27.44% since 2016
- 4+ Bedroom rentals have gone up .a total of 25.6% since 2016
- House rentals overall have gone up a total 26.5% since 2016
- Apartment rentals overall have gone up a total of 13.15% since 2016
- 1 Bedroom rentals are naturally the cheapest, however it’s interesting to see that they’re fairly close in price to 2 Bedrooms. This means that if you were to opt for a 2 Bedroom rental as opposed to 1 Bedroom, it wouldn’t be that much more expensive.
- 3 Bedrooms are a step above 1 & 2 Bedroom, making these rentals the middle choice as far as price range goes. They also seem to be steady in their upward trend. This is because 3 Bedroom homes can be very versatile. They are suitable for families, couples, roommates, professionals who need an in-home office, or even as student housing. This all contributes to a stable, mid-range, upward trend.
Mapping it Out
Now that we understand the trends and the breakdown, it would be helpful to map it out to different areas of the city. Just like the number of bedrooms, the area of the rental plays into the lifestyle and family-related choices of renters.
This box plot can be very helpful because we can understand how different areas compare in terms of price, and also what the spread of prices is for each. (Click or tap the picture to zoom in)
Interpreting The Diagram:
- The number in the middle of each box is the median value which represents the exact middle of the price range (it’s exactly in the middle between the highest and the lowest recorded points).
- The coloured box shows where the middle 50% of prices fall, and is helpful in understanding how prices are clustered in relation to the middle point.
- The T-shaped lines (whiskers) above and below show us how us how far prices can stretch. For example, the Beechwood/University area has seen prices starting just above $1500 and going all the way up to the low $3000s.
- It’s important to note that the whiskers don’t capture every single price point recorded. If prices are too far from the main box, they become outliers and are represented as points above the whiskers. This means they are too far out to be considered part of our price range for the area.
- Lastly, some very far outliers have been cropped off of the graph for readability.
- Downtown/West Ward, Forest Heights, Stanley Park, and Victoria Hills have been the most budget-friendly neighbourhoods in the lineup. This is because their median price points are the lowest out of all areas.
- Lexington and Beechwood/University areas have offered the most variety in terms of prices. For these areas you’ll notice the main box of the dataset is quite long. This means that these areas not only offer a wider range of prices, but these occurrences are consistent as well. In addition to that, Lexington has also had a wide range of less frequently occurring prices. Notice how the whiskers on the Lexington plot are very long. These prices aren’t as consistent, however.
- Pioneer Park has been widely undecided. There is a very wide price range, however the data is too spread out to even be considered a “whisker”. Instead, we just have a wide spread of outliers making it uncertain which price range the market wanted to settle in.
- Columbia Forest and Colonial Acres have been the most expensive in this batch, having the highest median price. This, however, excludes Hidden Valley, which we are going to talk about next.
A Note on Hidden Valley
Speaking of outliers, we have the case of the Hidden Valley area in Kitchener. Hidden Valley hosts many beautiful luxury homes, and is therefore the most expensive area in KW.
There is a market for rentals in this neighbourhood as well, and the prices are by far the highest in the city.
Because of that, the prices from Hidden Valley are excluded from the data so that we can focus better on the other neighbourhoods.
It’s Now February 2020
Now that we have the background, we can take a look at 2020.
The year is just starting out, so we only have a month’s worth of data. While that is not sufficient to break down into individual neighbourhoods (it would be much too spotty), we can use quadrants instead.
Breaking it down into 4 areas will let us take a peek at the market as it’s starting the year.
It’s worth noting that this is just the beginning of the year, so values are likely to change as time passes and more data comes in. That being said, this is where we’re at right now.
The question at this point is, “what’s next?”
As mentioned by CMHC, the rental market is expected to continue to be competitive as the population grows.
This affects prices as more rentals are being demanded.
This brings us to our last stop, which is this graph. It shows the number of new rental listings that have appeared each month since the beginning of 2018.
It’s worth clarifying that this is the number of new listings appeared, and not the total number of listings available.
Each year has its own colour. January 2020 is the green dot.
- You can see the seasonal trends of the real estate market reflected in the lines
- It looks like the most amount of options are available between March and August, so if you want to see a wide selection of what the city has to offer, that time frame is ideal.
- Be careful, however, because that is also when most renters typically go out shopping, so competition is likely to be higher during those time frames.
- On the flipside, fewer people shop around the beginning or end of the year, so these periods may present opportunities to beat the competition (however, options will be more limited)
- On an optimistic note, supply seems to be up slightly this year in January versus 2019 and 2018. The lone green hopeful dot on the left is where we’re at right now (71 new listings). You can’t predict the fate of the market from just that one datapoint, but it’s good to see the supply side growing at least a little bit. 2019 overall also had slightly more listings than 2018 (total of 732 in 2019 vs 714 in 2018)
Wrapping it Up
Kitchener-Waterloo is a great city to live in, and it’s going through an exciting growth phase. It’s no surprise that more and more people are attracted to the area and want to become part of it.
We hope this overview has helped you understand the context of the KW market and the current status of prices in the area.
As mentioned before, being informed on the market and being prepared ahead of time are key to navigating competitive environments.
Original Source: WRX Property Group