How the 'missing middle' is pushing K-W housing prices higher and higher

As the price of single, detached homes tips over $850,000, a housing economist is calling on developers and the housing industry to find a replacement for the traditional family home, which is now unaffordable for all but the highest-income earners in Waterloo region.

Single detached homes are unaffordable for all but the highest-income earners in K-W

Unlike big cities like Toronto, Chicago, Boston and New York — which were crowded, densely populated cities, even in the early 20th century — a lot of early high-density housing in Waterloo region were factory homes. (Kate Bueckert/CBC)

When news broke that Waterloo region real estate had smashed through yet another record in January, housing economist Dawn Parker wasn't surprised. 

It's not that $850,000 isn't a lot of money for a single-detached home in the area. Rather, she'd seen it coming for months — years even. 

Instead, what caught Parker's eye in the Kitchener-Waterloo Association of Realtors report was a brief mention of the price of apartment-style condos. It went down, compared to the previous January; the average sale price decreased 1.4 per cent, coming in at $383,196. 

It's the first time that's happened since the bottom briefly fell out of the housing market in the spring of 2020.

And Parker says that's real-market evidence of her current research: that the local housing market hasn't been producing apartments and condos that can actually accommodate families, people looking to downsize and appeal to modern urban ideals. 

Think: grand apartments like in Marvelous Mrs. Maisel

"What we've seen built in the apartment market are really small units. Bachelor apartments, one and smaller two-bedroom units," said Parker who is a professor in University of Waterloo's School of Planning. "So it's not necessarily surprising that in this moment in time we're seeing less appreciation in that smaller apartment market."

"There is a stronger need for the larger units that would house families, given the demographics of the region."

In 2020, Statistics Canada said Waterloo region had the fastest-growing population in Canada.

And those factors combined creates what Parker calls this the "missing middle." She says unlike big cities like Toronto, Chicago, Boston and New York — which were crowded, densely populated cities, even in the early 20th century — a lot of early high-density housing in Waterloo region were factory homes. 

"I always like to point to that grand urban apartment building like we see in Mrs Maisel's (of The Marvelous Mrs. Maisel) extended family home," said Parker.

On top of that, developers, said Parker, see demand as "who's buying" — which can create a chicken-and-egg conundrum. 

"If the product isn't there for people to buy, they don't have those family buyers. So they continue to not perceive them as their target market."

Crews work on a new condo tower in downtown Kitchener on March 9, 2020. (Kate Bueckert/CBC)

Bruno Richter says he would have no hesitation raising a family in a two or three-bedroom apartment. 

"I don't need my own personal backyard. I would like a space that is mine, and my community's," he told CBC Kitchener-Waterloo.

But, he said, good transit would be essential. 

"I grew up in Kitchener from Grade 1 and on up and I remember my whole life, everyone used to say getting a car was freedom," he said.

"I got my car, and I thought I had freedom. Then in my late-20s I got a job in Toronto. I shed my car and I lived right close to the subway station and I had a metro pass — no car — and I learned what freedom was."

Parker agrees a solid transportation is key to Waterloo region's urban design; but not just the network downtown — in the suburbs too. 

"We have this great transit system with these networks and nodes, but we don't yet have these villages emerging at the nodes." 

Bottom line, says Parker, the region's housing market is hot and will likely stay hot in the immediate future, and the industry needs to create a substitute for single detached houses, which according to a City of Waterloo report in December, have become unaffordable for all but the highest-income earners. 


Jackie Sharkey is a producer for CBC News in Kitchener-Waterloo and an occasional guest host. She has been been based in Kitchener, Ont., since the station was created in 2013, after working for CBC in Kelowna, B.C., Quebec City and Rankin Inlet, Nunavut.


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