Kitchener Waterloo Economy and Your Mortgage - Why would you buy a home and get a mortgage in this area?
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Kitchener and Waterloo taken together make up one of the most diverse, dynamic and innovative local economies in North America, an economy that is certainly positioned for substantial future growth. In looking at local industry sectors and their expansion strategies, the growth effects of local universities, and the net migration phenomena, we will see why housing prices will continue to rise over the long term, and in turn, why attaining a mortgage in the area makes so much sense.
The Kitchener Waterloo economy is very diverse. The largest employer in Waterloo is the insurance industry, with Sun Life Financial, Manulife Financial, Equitable Life and Economical Insurance supporting thousands of skilled service positions. These companies all have significant National presences in the area and are quite financially strong. In addition, they all have major long term growth plans respectively. The University of Waterloo and Wilfred Laurier University are also rapidly expanding institutions and large employers in the area. We will return to the economic effects of these institutions when we review them more specifically in the next section. Waterloo’s most infamous and high growth industry sector, is high technology. The City is host to Canada’s largest and fastest growing and financially stable tech firm, Research In Motion. In 2009 alone, this company will be hiring over 3,000 employees in the area. Other major tech companies , such as Google continue to hire as well. Indeed, as the Kitchener Waterloo area is known as Canada’s ‘Technology Triangle’, the region is proud to call itself home to a multitude of other large technology corporate head offices and manufacturing facilities. Some of these corporate headquarters include, but are not limited to Descartes Systems, Dalsa Technologies, Christy Digital Media, Maplesoft, MKS, Open Text and Sandvine Technologies. All of these companies will continue to experience substantial growth as their roles are fundamental in the emerging global digital economy. The success and focus of Kitchener Waterloo’s innovation, local talent and corporate base has also attracted many international technology firms to the area, including Google, Oracle, Sybase, McAfee, NCR and AGFA. Truly a good place to get a mortgage and buy a home.
The City of Kitchener has major Advanced Manufacturing operations that operate in diverse industry segments, from food processing to auto parts manufacturing. Kitchener helps cater to industry with its four large business parks. Although some of Kitchener’s major employers have come under hard times recently, the long term prospects for auto parts supply to the local Toyota manufacturing facilities, combined with the diversity of other industries, look quite promising. While continuing to support the manufacturing sector, Kitchener is focusing much of its short and long term economic growth on two key areas: Bio Technology and Digital Media Technology. The City of Kitchener is investing over $100 million dollars between 2007-2010 to help foster the emergence of a Biotech Industrial Park and a Digital Media Park. The City is working closely with both local universities, and several large corporations to initiate these projects. The projects have already commenced with the construction of the University of Waterloo’s School of Pharmacy and Health Sciences. In order to attract international talent to work and live in the City of Kitchener, massive efforts are taking place to completely make over the entire downtown area. Kitchener’s downtown will not just be a safe and acceptable place to live and do business, but will become a truly dynamic and exciting model of what a City Center can be. Since according to most economists and the Canadian Federal Government, the areas of biotech and digital media are positioned for very strong growth, we can see how Kitchener stands to prosper substantially off of these projects. Over the long term, there is a strong possibility that the Bio Technology and Digital Communications Parks could translate in to billions of dollars in local revenues, strong growth in employment, and when combined with low mortgage rates, strong growth in home prices.
Read Kitcheners Economic development plan for more specific details.
City of Kitchener Economic Development Plans
Many of the clients that I have attained mortgages for are in some way involved with either The University of Waterloo or Wilfred Laurier University. Not only are these schools renowned internationally, but they are expanding their campuses at very rapid rates. In recent years the Universities, particularly the University of Waterloo have been working to ‘spin off’ or ‘seed’ companies using the knowledge and technological innovation that the institutions foster respectively. This strategy has seen payoffs that literally translate into the $10s of billions of dollars. Research In Motion was the first prominent company to be hatched by the University of Waterloo and one of its ingenuous PHD professors, Mike Lazaridis. As one of the largest companies in Canada, and the largest technology company in Canada, RIM continues to invest hundreds of millions of dollars in the Waterloo Region to help advance technological innovation and theoretical physics. Indeed, Dr. Steven Hawking is closely considering the Region as a place to call his permanent home as Waterloo boasts the largest and best funded theoretical physics institute in the world, The Perimeter Institute. Stemming from this success, the University of Waterloo built in conjunction with Federal and Provincial Governments the 120 acre university of Waterloo Research and Technology Park. In future years, this park should continue to create billions of dollars in corporate and employment growth, and technological innovation.
Click here for detailed information on the UW Technology Park:
The University of Waterloo Technology Park
As mentioned, Wilfred Laurier University and The University of Waterloo also play major roles in the Development of the Bio Tech Park and the Digital Media Park in Kitchener. Finally, by having thousands of students graduating with advanced degrees in the Kitchener Waterloo area every year, we certainly experience a consistent supply of new home buyers and talented citizens.
For an excellent study on how the Universities will continue to positively impact the local economy, please click here:
How the Universities will benefit the local economy
If by this point, I still haven’t proven my case for attaining a mortgage and purchasing a home in the area, perhaps this final point on strong net migration will help solidify my argument.
To start, by net migration I am referring to the trend of citizens moving into the area faster than they are leaving. So the result then, is population growth. When we have population growth, and when combined with the unusually resilient employment strength in Kitchener Waterloo, the result is growth of home prices which makes attaining a mortgage and paying off your own home look even more attractive.
One of the chief explanations for much of this net migration goes beyond the natural industry strength, diversity and growth in the area. The long term population growth directly relates to a plan commissioned by the Government of Ontario in 2006 that mandates a green belt surrounding the Golden Horse Shoe (the cities surrounding the bottom of Lake Ontario including Hamilton, Mississauga, Toronto...). The effect of this mandate limits the outward growth of these cities, and forces developers to build on the other side of the green belt. Kitchener Waterloo, Cambridge and /Guelph happen to sit just beyond the mandated green belt area and thus, when combined with other local economic and educational strengths, area make an ideal location for developers to expand. Indeed, the Kitchener Waterloo and the area is only about one hours drive away from Toronto. So there is a long term, government mandated, structural component as to why the area should continue to experience consistent long term growth.
For further information on any of these economic initiatives, please do not hesitate to contact me, Brent Richardson, for details, home value growth trends, or information on the latest mortgages and mortgage rates. brent@brentrichardson.ca - 519 568 3377
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