It’s not exactly a secret that the real estate market in Canada has been white hot, despite what many believed would be a slowdown caused by the pandemic.
At the beginning of 2021, national home sales in Canada increased by 2% in January over the year before, which had already broken records. By September, the market conditions seemed to be cooling off slightly. However, since then, sales have continued to rise and listings have declined. With low inventory and a high demand for new homes, the average home prices will continue to rise in what are already the most expensive housing markets in history.
So, what predictions can we draw from this for 2022?
If trends continue on their current trajectory, we can expect home prices to continue to rise and sales to continue to peter off. This will be because mortgage rates will rise as part of an attempt to cool off the market. There will still be a demand for people looking for a new home, but more buyers will be unable to satisfy financial eligibility requirements. This will, in turn, place pressure on the market for rentals, which is already growing extremely competitive in major markets like Toronto.
"We have seen a dramatic resurgence in rental demand this year," said TRREB President Kevin Crigger. "This demand will be augmented in 2022 and 2023 by record levels of immigration. Unfortunately, the supply of rentals is not keeping pace."
Crigger explained that while the City of Toronto recently announced a new vacancy tax to increase rental supply, it is "not a magic solution."
"GTA municipalities and the Ontario government must work collaboratively to streamline the planning and development approvals process to alleviate the current supply backlog and to meet the needs of today – let alone the needs of tomorrow," he warned.
Nevertheless, there remain accessible markets out there for many Canadian homebuyers and the outlook for years ahead suggest that a new home remains a sound investment.
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