Buying a Pre-Construction Condo: Supply & Demand

Buying a Pre-Construction Condo: Supply & Demand

By Condo Culture

Local Kitchener-Waterloo Condos 101: Supply & Demand

One question we get asked all the time is how much growth is too much growth? It’s natural to see the cranes in the air and all of the new Kitchener-Waterloo condos going up across our city and wonder if we are ever at risk of building too much or on the flip side, if enough are being built to satisfy future demand.

While it’s impossible to predict with 100% accuracy how close demand will match supply in any industry (the million dollar question for economists everywhere), our obsession with condos and our love for data puts us in one of the best positions possible to be able to advise and help answer this question as it relates to the local condo market.

As you may know, we track and analyze every single new Kitchener-Waterloo condo development announced, in the planning stages and those about to hit the market. We do this to ensure not only are all of our clients in the loop and have an opportunity to purchase the best units in these developments, but also as a way of measuring how much supply is scheduled to hit the market relative to demand so we always know where the market is headed and can advise accordingly.

When it comes to supply, the single most important factor we’ve learned over the years is not necessarily how many new condos are being built, but when they will be completed. It’s easy to see a number of new projects under construction and assume that this means hundreds of new condos will soon be hitting the market and to some extent, that’s true. But the amount of time it takes to build a new condo building (typical local high-rise condos usually takes about 2-4 years), and the fact that construction usually begins at different times and units within them are often completed gradually floor-by-floor means even if a number of condos are under construction concurrently, units in those buildings are usually completed and handed over to residents at very different times.

So why is this important? Take the current market for example. In the core areas, we currently only have 3 main projects under construction: the 155 Caroline Street, the Midtown Lofts and One Hundred Condominiums together consisting of over 600 new units.

Sounds like a lot right? However, now consider that the completion of these Kitchener-Waterloo condos will span gradually between the end of this year through 2019, and this creates a very different picture with supply being delivered a lot more gradually to the market than it may appear at first blush.

Considering the size of our local population, its prospects for growth, increasing employment in and around where many of the newer condos are being built, the increasing cost of single detached housing in our core areas, and the many lifestyle and demographic factors driving more and more residents towards condo life in the Uptown Waterloo and Downtown Kitchener areas, the number of new condo units being added to the market remains conservative and among the strong fundamentals of our local market, we expect demand to continue to grow alongside supply, a trend that is definitely supported by our observations within the current market.

For all of your Kitchener-Waterloo condo selling, buying, leasing, and investing needs, be sure to send us a message or visit our Waterloo store to have a conversation.

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