A Return to Normal " Real Estate " 2022
Posted by Helena Bowen on
Last year was one for the Real Estate history books. The pandemic helped usher in a Buying frenzy that led to a record number of home sales and historically hight rate of appreciation, as prices soared by a natuional average of 19.9% year over year, accoriding to the Canadian Real Estate Association.
There were sign in the second quarter that the red hot housing market was betginning to simmer down . In June, the pace of sales slowed while the average sales price dipped to 5.5percent below the spring time market.
But just when the market seemed to be cooling, home prices and sales , volume ticket up again, and in the fall, homes prices soared, with a decrease in inventory. Leading the Royal Bank of Canada to speculate, " Canada's housing market run has more in the tank, than on the market..
So what is ahead for the Canadian Real Estate market in 2022? Here where industry experts predict the market is headed in the coming year.
MORTGAGE RATES WILL CREEP UP
The Bank of Canada has signalled that it plans to begin raising interest rates in the middle quarter of this year. " What does that mean for Interest rates?"
Expect higher variable mortgage rates to come. In fact according to industry trade blog Canadian Mortgage Trends, some lenders have already begun raising their variable rates in preparation. According to the site, " Current market forecasts show the Bank of Canada on track for seven quarter point rate hikes by the end of 2023, with Scotiabank expecting eight rate hikes.
Since September, Fixed mortgage rates, will follow the 5 year Bank of Canada bond yield, have also been clibing. Fortunately, economisits believe the housing secotr is well - positioned to absorb these higher interest rates.
What does this mean for you? Low mortgage rates can reduce your monthly payment, make it easier to qualify for a mortgage, and make home ownership more affordable. Fortunately, there is still time to take advantage of historical low rates.
VOLUME OF SALES WILL DECREASE
A record number of homes were sold in Canada last year. The Canadian Real Estate Association estimates the 656,300 home purchases took place throughout the entire year, which is an 18.8 per cent increase over 2020. So its no surpise that the pace of sales will eventually slow.
The Association predicts tat, nationally, the number of home sales will fall 12.1% in 2022, which would still make 2022 the second best year on record.
It attributes this relative slow down to affordability challenges, and a lack of inventory but expects sales volume to remain high by historical standards. " Limited supply and higher prices are expected to tap the brakes on activity on 2022 compared to 2021, although increased churn in resale markets resulting from the COVID related shake up to so many peoples lives may continue to boost activity above what was normal before COVID -19.
What does this mean for you? The frenzied market we experienced last year required a drop everything committment from amny of our clients, so a slower pace of sales should be a welcome relief. However, Buyers should still be prepared to compete for the best properties. We can help you craft a compelling offer without compromising your best interests.
THE MARKET WILL BECOME MORE BALANCED
In 2021, we experienced one of the most competitive real estate markets ever. Fears about the virus, a shift to remote at home working, and economic stimulus trigger a huge uptick in demand. At the same time, many existing homeowners delayed their plans to sell, and supply and labour shortages hindered new construction.
This led to an extreme market imbalance that benefitted sellers and frustrated Buyers. According to an economist at Moody's Analytics, " almost all indicators of the housing market activivity shot through the roof". But, she continued, " The housing market is now showing signs of returning to earth."
The Royal Bank of Canada expects to see demand soften graduly as rising prices and interest rates push the cost of homeownhership out of reach for many would - be Buyers.
The supply of available homes continues to remain low, according to Singhy, and the " pace of building in Canada remains elevated compared with historical averages thanks to low interest rates.
What does this mean for you? If you struggled to buy a home last year, there may be some relief on the horizaon, Softening demand could make it easier to finally secure the home of dreams.
If you are a Seller, its a great time to cash out your big equity gains, and with less competition and a slower market for sales, you'll have an easier time finding your next home.
Reach out for a free consultation so I can discuss your specific needs and goals.