Canadian Housing Market Trends to Watch in 2022

Canada’s housing market has been a fixture in media headlines and a ubiquitous topic of conversation around dining tables and water coolers for those who continue to work in an office environment post COVID-19. At the beginning of the pandemic, some expected a sharp drop in home sales and prices in Canada, but no one could have predicted what the market actually turned out to be. In May 2020, the regional real estate markets began their recovery. The surge in demand continued into 2021, leading to record-breaking price growth and what many would consider to be the hottest year for Canadian real estate. So what can we expect in 2022? Here are five trends to keep an eye on.

Rising interest rates are to be expected.

Rumor has it that interest rates will rise as early as April. This will be the Bank of Canada’s first move after three rate cuts in March 2020 prompted by the pandemic and the resulting economic fallout. The economy began to recover as vaccines found their way into guns, businesses reopened and consumer confidence returned. We’re not over the hump yet as the Omicron variant will bring further public health measures and threats of lockdowns in some provinces, slowing down certain industries. Real estate is not one of them. Canada’s housing market resumed its uptrend after a steep but short-lived drop in activity early in the pandemic, with seemingly no end in sight. The high demand led to a record-breaking price hike, with sales held back only by a lack of supply.

With interest rates expected to rise in time for the busy housing market in the spring, some buyers may be looking to lock in a bottom now as they are unlikely to get any price breaks. Will higher interest rates serve to cool down the hot Canadian housing market? The Big 6 banks have forecast that the Bank of Canada will hike its overnight lending rate by 1 percent by the end of 2022. Only time will tell what impact this will have on the market, but given current levels of supply and demand, a percentage increase is unlikely to be a significant factor in sales or prices.

Canadian home prices are likely to continue to rise.

Speaking of prices, the 2022 Canadian Housing Market Outlook Report analyzed 38 Canadian housing markets and identified rising prices in 100% of them in 2021, and continued growth across the board for 2022. RE/MAX brokers and agents expected price growth to be that of a from a low of +2.5 percent in Calgary to a high of +20 percent in Muskoka. From a national perspective, the average house price is likely to increase by 9.2 percent.

Low supply will continue to be a concern in Canada’s housing market.

Housing affordability has been steadily declining in Canada and was a key concern for all political parties in the 2021 federal election. Ontario has become ground zero for unaffordability, so this is expected to be a hot topic in the provincial elections scheduled for June 2, 2022 as well topic will be. What is the culprit behind rising prices? Low offer.

Industry experts have attributed soaring house prices to housing shortages, compounded by a notable surge in demand in 2020 and 2021. This is expected to continue as 1.2 million people are expected to immigrate to Canada by 2023 and in total they are believed to be in need of a home. Since no major increase in offers or new buildings is to be expected, industry experts assume that market pressure could increase and put increasing pressure on prices.

While opinions differ on how to effectively launch the offering, RE/MAX executives have pointed to a few potential solutions, including:

  • A national housing strategy to increase supply in a coordinated federal, state and local effort.
  • Incentives for developers to build more affordable family-size homes near transportation hubs, such as B. Tax rebates, cutting out unaffordable bureaucracy and simplifying the planning application and permitting process.
  • Incentivizing homeowners to relocate and alleviate the financial burden of selling a home by offering tax rebates and reevaluating Toronto’s dual real estate transfer tax (homebuyers here currently pay a provincial and municipal LTT). This could help increase the supply of deals.

Federal and provincial governments are also encouraged to work together on ways to improve local economies to attract residents. Canada has many “affordable” cities that do not always have the same appeal as large urban centers. A shift in focus from cities like Toronto and Vancouver could help ease pressure and prohibitive price growth.

Canadian real estate is dominated by seller’s markets.

By the end of 2021, 97 percent of the Canadian housing markets analyzed by RE/MAX Canada (37 of 38) in 2022 should be seller’s markets characterized by low supply, high demand and rising prices. This will likely continue into 2022 as well, as adding offerings to the market isn’t a quick fix.

Virtual transactions are the future.

Buying and selling homes virtually wasn’t just a passing trend that got us through the pandemic lockdowns. Quite simply, consumers have tasted this sweet convenience and are unlikely to give up once COVID-19 is behind us. From sites like REMAX.approx and real estate By bringing listings right to your fingertips and offering virtual tours the ability to view a home without ever having to leave the comfort of your own home, it’s safe to say that the virtual trend is the new reality for many buyers and sellers will.