Nearly 1 in 10 homes sold in Waterloo region cities either flipped or rented out: study

Nearly one in ten homes sold in Waterloo region's cities are either sold off quickly or purchased and leased out, a new report says.

The Canada Mortgage and Housing Corporation (CMHC) released a new report Thursday morning, saying nine per cent of all homes that went on the market in Kitchener, Waterloo and Cambridge between Jan. 1, 2015 and June 30, 2018, were either for short-term gain or long-term investment.

This was a time frame that saw the real estate market in the cities heat up, with bidding wars over homes as well as houses selling for record-high prices.

"Perhaps unsurprisingly, investment activity became more pronounced as the pace of average price growth increased, which makes intuitive sense since there is larger potential gains to be realized in a market where prices are growing rapidly," the report said.

For the report, the CMHC defined a short-term sale as a house bought and sold within a 24-month period.

A long-term investment was considered a home purchased and leased out within 24 months "since this illustrates that the buyer had no intention of living in the unit long-term."

Buyers wanted to be near LRT

Kitchener saw the most short-term sales and investment activity out of the three cities, the report said.

This is "partly because Kitchener has the largest population," the report notes, but "population size alone does not entirely explain the findings." 

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Kitchener has seen a steady rise in short-term and investment sales from 2012 to 2018, the report said.

That may be in part due to the ION LRT.

In 2012, 7.8 per cent of all short-term sales and long-term investments were within one kilometre of an LRT station.

That rose to 14.4 per cent in 2017, although the report notes those sales did fall in the first two quarters of 2018, which is also when prices started to stabilize in the local real estate market.

Out-of-town buyers

The report noted for short-term sales or long-term investments, one in five buyers were identified as being a "non-local buyer." That means the buyer did not have an address in Kitchener, Waterloo or Cambridge.

The report said 72 per cent of those non-local buyers were from the Greater Toronto Area, followed by Guelph in second place and Hamilton in third.