NEWS FROM "THE HOUSE TEAM"

Waterloo Region's housing market is cooling off, but it isn't going into a deep freeze. After years of booming sales and feverish construction, the market is slowing down, particularly on the home-building side. But low mortgage rates, strong population growth and solid consumer confidence will keep it from going into a tailspin, the Canada Mortgage and Housing Corp. said yesterday at a housing outlook conference in Kitchener."Things are slowing down, but there still is lots of good news," Ed Heese, the corporation's senior economist, told the audience of real estate agents, builders and mortgage brokers.

After a sustained upswing that started 10 years ago, the market has peaked, said Erica McLerie, the corporation's market analyst for Waterloo Region. But we won't see a repeat of the early 1990s, when a recession and double- digit mortgage rates made life miserable for home owners, not to mention builders and real estate agents.

Mortgage rates will remain near historic lows so we won't face an affordability crisis even though house prices have increased sharply, said Heese. "We don't see a situation where people can't handle their debt." The federal corporation is forecasting sales of 8,800 homes next year. That's down 2.8 per cent from the forecasted total for this year, but it's only 4.2 per cent lower than the record of 9,185 set in 2005.

The pool of first-time buyers has shrunk, but those buying up or downscaling who are capitalizing on the equity in their homes, and net migration of 5,000 people a year into the area, will pick up the slack, McLerie said.Weaker demand and an increase in listings will take the pressure off house prices, she said. The corporation says the average sale price will rise 4.2 per cent next year, down from
more than seven per cent this year.

The average price will rise to $247,500 in Kitchener and Waterloo, and to $249,000 in Cambridge. With the surge in listings, it's critical for home owners to be realistic about their asking price, said Jeff Reitzel, owner of Keller Williams Golden Triangle Realty in Kitchener.
"Houses that are priced right are still selling in four to six weeks," he said. "Houses that are off by $10,000 or $15,000 are not selling whereas a year ago if they were off by $10,000 or $15,000 they were still selling."

Reitzel said rising prices aren't squeezing buyers out of the market. He noted that there are 172 homes listed in Kitchener and Waterloo for under $175,000 and 106 for under $149,000. Price is the main culprit in the gloomier outlook for home builders. The number of housing starts will tumble 19.5 per cent this year and will fall another 7.6
per cent next year, the corporation said. It says 2,800 housing units will be started next year, including 1,600 single-family homes.

Rising land, labour and material costs have pushed new home prices out of the reach of many buyers, said McLerie. And with more resale listings, buyers have more existing homes to choose from, she said.

Rising land prices and concerns about affordability have sparked increased construction of semi-detached homes, townhouses and apartments.

Multi-unit developments account for 40 per cent of housing starts in the region, up from 18 per cent 10 years ago.