The Waterloo region’s housing market is a “little bit more predictable” for both buyers and sellers at the start of 2023, the president of the Waterloo Region Association of Realtors says.

It’s a very different picture from a year ago, which saw a red-hot market in the region and the average price of a single family home skyrocketed to more than $1 million.

“It was such a roller-coaster of a year and it was definitely not, I would say, an average real estate year,” Megan Bell told CBC Kitchener-Waterloo’s The Morning Edition.

“When things started to moderate and we saw the interest rates rising, we did remain steady once we had that big drop… now the market is, for lack of a better term, a little bit more predictable for both buyers and sellers, which is bringing a little bit more comfort to each party instead of that craziness that we saw leading into 2022 and definitely those first two months of 2022.”

The Bank of Canada started to raise interest rates in the spring and that saw sales slow in the region to the point that home sales were the lowest they’ve been in more than a decade in December, the Waterloo Region Association of Realtors.

Last month, 280 homes were sold — a decrease of 38.7 per cent compared to December 2021.

The drop was not unique to the Waterloo region. The Canadian Real Estate Association (CREA) benchmark price of a home in Ontario — a measure that combines sale prices of condominiums, attached and detached houses across all markets in the province — fell by 20 per cent by December after it peaked at $1.08 million in March 2022.

Rishi Sondhi, of TD Economics, told CBC News he forecasts prices in Ontario will decline through early 2023 but bottom out in the second half of the year.

“We think that the bulk of the correction … is behind us.”

Rising interest rates put a damper on the market

The cost of a home also drops with the interest rate hikes. In December, the average sale price for all residential properties in the Waterloo region was $720,596.

But Bell said that even with prices going down, the hike in interest did little for potential buyers.

“Because of how the interest rate went up, even though the housing prices went down, they were paying basically the same amount per month,” she said.

The year saw the Bank of Canada rapidly increase its policy rate from 0.25 per cent in March 2022 to 4.25 per cent in December, which brought higher prime rates and mortgage rates along with it.

By mid-year, home sales in the Waterloo region had already decreased by 32.8 per cent.

“It’s definitely taken some people out of the market,” Bell said.

But Bell, who is herself a realtor with Royal LePage Wolle Reality in Kitchener, says she’s optimistic about the growth that the Waterloo region will see this year.

“Our area attracts so many different employment sectors and a lot of people who come from universities love our area and they tend to stay. So we’ve got an amazing depth of who’s purchasing in our area,” she said.

Mark Ostland, a real estate expert with Meridian, Ontario’s largest credit union, told CBC News if the Bank of Canada is done raising rates, that will give more confidence to potential buyers.

New rules for condos, foreign buyers

And there’s good news for buyers interested in condo purchases, specifically.

On Jan. 1, the federal government amended regulations to better protect condo purchasers.

Condo developers are now required to use the Bank of Canada rate to pay purchasers interest on their money in the event of a terminated purchase agreement, including condo development cancellations.

Bell sees the move from the federal government as a positive.

“I think it’s nice to have that protection in there for purchasers so that they just can’t have the rug pulled out from under them.” she said.

The federal government also rolled out a new regulation banning foreign buyers from entering the real estate market. It’s something Bell says may actually impede growth in the region.

“A lot of realtors were quite disappointed when the government brought that in. It’s really not helping with the actual issue which is supply,” she said.

She said in the Waterloo region, a lot of the major purchasers were not foreign buyers. In fact, they were mostly local buyers and people from cities farther away who didn’t mind commuting to work.

Bringing back a healthy balance

Bell says to help with growth, the region has implemented a lot of housing developments in order to get more inventory on the market.

She added there are a lot of different housing options in the works from single detached homes, to condominiums to four-plex homes.

While it’s still a sellers market, Bell is looking forward to a more stabilized market this year.

“What we’re really hoping for is that the interest rates kind of stay where they are and then perhaps the Bank of Canada starts to ease off on them,” she said.

If the average price could stay around the $720,000 mark, that would really help put the power back in the hands of buyers while helping with affordability, he said.

For those who are hoping to buy a home this year, Bell’s advice is not to wait.

“Buy when you want or sell when you want. Don’t try and time the market because you can never predict what will happen,” he said. “Do what’s best for your situation.”