Pandemic prices and work-from-home renos: How COVID-19 impacted Waterloo Region’s home improvement and real estate markets

WATERLOO REGION — As the initial shock of the COVID-19 pandemic subsided and people realized the disease wasn’t going away any time soon, Jamie Adam’s phone began ringing off the hook.

It was the summer of 2020, and a short-lived slowdown when the crisis first struck had been replaced by a huge surge in demand for the services of Adam’s residential renovation company, Pioneer Craftsmen.

“For my own business, truthfully, we were one of the lucky ones,” said Adam, president of the third-generation, family-owned Kitchener firm.

With many homes being pressed into service as offices and classrooms, people were looking to create individual spaces that would meet their family’s needs, Adam said.

In troubling times, “people always like to cocoon,” he said. “Their home is their safe place to go.” Those with the means to invest in their properties wanted to “really make it a place they can enjoy.”

It was a similar story for Waterloo’s Imagine Fiberglass Pools, which sells and installs swimming pools manufactured by an affiliated company.

“There was a point that if I left the building, I’d come back and there would be four or five messages,” said co-owner Melissa Lehman. “There was overwhelming demand for a period of time.”

Like Adam, Lehman said her customers were looking to create an escape at their own homes, if they couldn’t easily travel or get together with friends.

“I’m going to do something in my home to keep us happy, keep us entertained,” Lehman said of that approach. “It was something to look forward to, for a lot of people.”

Supply chain challenges across many sectors didn’t help to ease demand-driven delays.

“From 2020, we ran into 2021 and in 2021, we ran into 2022,” Lehman said. “As a manufacturer, we’re limited to how many (pools) we could actually produce. We definitely maxed out what we could put in in a year.”

Both Lehman and Adam added staff — not an easy task, Adam said, given a shortage of skilled tradespeople that predated the pandemic.

For those looking to buy a home, dirt-cheap interest rates — the Bank of Canada lowered its policy rate to 0.25 per cent in an effort to stimulate economic activity at the start of the pandemic — and an existing lack of inventory fuelled a real estate frenzy that peaked in February 2022.

“It was kind of a perfect storm,” said Waterloo Region Association of Realtors president Megan Bell.

“We were very fast-paced from about 2017 on,” she said. The pandemic “kind of accelerated things a little bit faster.”

With local demand already outpacing the relatively low number of listings available, realtors also saw increasing interest from buyers heading west from the Greater Toronto Area.

With cash in hand from the sale of properties in the pricier GTA and remote work offering many people more flexibility in where they lived, out-of-town buyers went head-to-head with locals in a highly competitive market.

“We saw a lot of our own clients move out to the outskirts,” Bell said — places like London and Woodstock, where buyers from Waterloo Region could get more for their money.

Bidding wars became commonplace in the overheated market; typical sale conditions like home inspections and financing went out the window.

Seasoned buyers tended to keep their budgets a bit more conservative, Bell said, correctly predicting the low rates wouldn’t last forever.

“A lot of the buyers, especially if they were first-time homebuyers, didn’t quite think that the rates would go up the way that they did.”

As house prices and inflation soared — with overall average house prices in Waterloo Region passing the million-dollar mark for the first time just over a year ago — the Bank of Canada embarked on a series of interest rate hikes that have brought sale prices down but made it more costly to own a home.

The speed at which rates went up, to the current policy rate of 4.5 per cent, even took many in the real estate business by surprise, Bell said. Some potential buyers stopped looking, depressing demand and prices.

As of last month, the overall average price for all property types in the region was down about 25 per cent from its peak, from $1,012,930, to $758,698.

A belief that interest rates may start to come down by the end of the year could help to get some prospective buyers off the sidelines.

“I’ll be interested to see what March (results are) compared to February,” Bell said.

As for the home improvement sector, both Adam and Lehman said things are becoming more manageable.

Construction costs have risen along with interest rates, prompting some people to scale back their projects, Adam said.

One thing that hasn’t faded in the three years since the pandemic began, Adam believes, is a renewed appreciation of the importance of home.

“I think there was a significant change in the way people value their homes,” he said.

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