Canadian Real Estate MarketNovember 25, 2021
What to Expect Next Year in 2022
Get prepared for fewer homes on the Market
According to the Canadian Real Estate Association, predictions will increase to $718,000.
National home sales are forecast to fall by 12.1% to around 577,000 units in 2022. This easing trend is expected to play out across Canada, with buyers facing higher prices and a lack of available supply. At the same time, the urgency to purchase a home base to ride out the pandemic continues to fade. Still, with collection at record lows, the national average home price is forecast to rise by 5.6% annually to around $718,000 in 2022.
You know that bubble everyone keeps talking about. It may just burst.
UBS Wealth Management ranked Toronto as the second-worst city based on risk, next to Frankfurt, Germany, though Vancouver is in risky territory, too, in its annual global real estate bubble index.
Its forecast for Canada’s housing market: “Stretched affordability, tighter mortgage stress test requirements and an expected tightening of monetary policy by the Bank of Canada will challenge price levels in the coming quarte
And the answer to the question everyone wants to know is…Will home prices drop?
Yes, prices will drop, eventually. A recent RBC report about the current hectic market activity said, “It will take longer for upward pressure to dissipate than we previously thought . . . Expect prices to flatten in the second half of 2022 instead of the early part of the year.”
Here are some regional forecasts:
The report from Moody’s and RPS offered some regional forecasts for home prices. Here are some of the highlights:
- Alberta and Saskatchewan: These are currently considered “undervalued” housing markets but “will do better despite weaker economic fundamentals, precisely because they have retained better affordability.”
- Ontario: The strongest house price appreciation rates are expected in smaller metro areas, such as Brantford, Kitchener, Kingston, London, Windsor and Ottawa.
- The Greater Toronto Area: While this region currently “suffers from overvaluation…their house prices have also shown less sensitivity to overvaluation in the historical data since 2005, so they will likely experience less downward price pressure.”
- British Columbia: Housing markets here, too, are overvalued, particularly in Vancouver and the province’s other metro areas, Moody’s notes. “Given their overvaluation, the British Columbia metro areas will continue to have a downward pull on their house prices due to reduced affordability.”
- Quebec: Moody’s says Quebec presents important contrasts. “Montreal is the only metro area in Quebec not in the ‘correctly valued’ range of plus or minus 10% and will continue to experience a downward pull on its house prices due to reduced affordability.”
- Nova Scotia and New Brunswick: The highest home price appreciation is expected to occur in the metro areas of Moncton and Halifax.
- Newfoundland & Labrador: Aside from the Prairies, this is the one Atlantic province that is expected to see house price growth “advancing at the fastest rate.”
So what’s a good solution for buyers?
Buying a preconstruction project is historically a profitable option.
Investors, whose previously bought newly constructed units came up for occupancy last year, still saw a handsome appreciation in their property values, according to a new joint report from market research firm Urbanation and CIBC Economics.
The study showed that the average preconstruction unit that sold for $415,175 three to five years ago was worth 40 percent more last year — $595,614.
Despite a 13 percent drop in condo rents last year, 63 percent of those new-construction investors managed a positive cash flow on their units.
For the last 15 years, investors and buyers have benefited from buying pre-construction condos.
The long-term historical performance proves the benefits.
For more information on the latest preconstruction projects, give us a call Sunny Sharma, Toronto Real Estate Broker at 416-566-2850
With over 29 years of extensive real estate experience, Sunny Sharma is an internationally accredited realtor and widely respected Commercial Board member of the Toronto Real Estate Board. CCIM President Central Canada 2017 & 2018. Ranked #13 Producer by Production in all of Canada for CENTURY 21 for 2020.
Or Contact Kathleen Xie. For over 18 years, Kathleen has been dedicating herself to helping hundreds of families buy and sell their homes at the best price. Her skill and professionalism have made Kathleen one of the top producers with the Toronto Real Estate Board. Fluent in Mandarin, Cantonese and English, and with a track record for negotiating transactions efficiently and effectively, Kathleen dedicates herself to helping families buy and sell their homes at the best possible price and has built a solid reputation with the Chinese community, the fastest growing real estate market in the GTA. Call Kathleen at 416 587 8381