No big market changes are expected in real estate and like it or not, a continuation of the now-familiar Seller’s Market is predicted in 2022.
It’s no secret that the real estate market has been extremely active for the past couple of years, particularly in areas where city dwellers, who are no longer tied to a desk or office cubicle, have relocated to small towns or rural locations. Home sales are expected to slow in 2022, but only because there will be fewer homes available. Make no mistake, a continued Seller’s Market is predicted in 2022.
People have been waiting for the Ontario real estate bubble to burst and for evidence of a market correction for years now but, as Clayton Jarvis of MoneyWise states, “If a global pandemic, followed by a recession, followed by more pandemic hasn’t been enough to cool the market, it’s fair to wonder when conditions will change enough to give homebuyers some hope in the face of dwindling inventory and high prices”. While we can expect market ups and downs in the coming year, the current shortage of homes for sale is not likely to be affected.
“If a global pandemic, followed by a recession, followed by more pandemic hasn’t been enough to cool the market, it’s fair to wonder when conditions will change enough to give homebuyers some hope in the face of dwindling inventory and high prices.”
Clayton Jarvis, MoneyWise
With housing inventories still sitting at historic lows and an overwhelming number of buyers hoping to enter the market, experts predict that Canadians will have even fewer — yet more expensive — homes to choose from in 2022. As a result, sales are expected to drop compared to 2021 but it should be noted that last year was a record-breaking year for Canadian real estate. The Canadian Real Estate Association suggests that 2022 could then be the “second-best” year on record for home sales.
Buyers can find some comfort, though, in the notion that home prices aren’t expected to rise at the same rate they did last year. According to CREA, the average selling price was up 19.6% by the end of last year. In 2022, a small increase of something in the neigbourhood of 5-6% is expected by most experts. A less panicked atmosphere maybe, but still a strong seller’s market.
The problem for buyers (and the element working in the favour of sellers) is there’s still a severe imbalance between supply and demand – one that has been accidentally exacerbated by government programs to aid first-time buyers. As pointed out by Jarvis, if there are subsidies available for first-time buyers, that pretty much guarantees a strong demand and translates into higher sale prices for sellers. It seems the only real remedy to current market conditions is a huge increase in supply – and that, unfortunately, would take years to accomplish.
If the state of the real estate market has got you thinking that it might be a good time for you to make a move, it never hurts to speak to an expert.
Contact Mark today for insights into our local market and to find out what your property is worth.
