Will The Canadian Real Estate Market Return to Normalcy in 2022?

The year 2021 made it to the real estate history books! The COVID-19 pandemic ushered in a buying frenzy that resulted in record home sales and a historically-high appreciation rate, with prices hiking by a national average of 19.9% year-over-year.

But in the Q2, 2021, there were signs that the red-hot real estate market was simmering down. In fact, the pace of sales slowed down and the average selling prices were lower than the spring peak by 5.5% by June.

However, just as the housing market Canada seemed to cool down, prices and sales volume soared up again in the fall. This even left the Royal Bank of Canada speculating that the country’s real estate market run has more in the tank.

So, is there a possibility of the Canadian real estate market returning to normalcy in 2022? Here’s what the industry experts predict:

Mortgage Interest Rates Will Soar Up

The Bank of Canada plans to raise interest rates in the middle quarters (Q2 and Q3) of 2022. According to Canadian Mortgage Trends, current housing market predictions 2022 canada show that the Bank of Canada is on track for seven quarter-point (25bps) rate spikes by the end of 2023.

So, you can expect higher variable mortgage rates. In fact, some mortgage lenders have started raising their variable rates in preparation for this change. Besides, fixed mortgage rates have also been hiking since September last year.

Fortunately, industry experts believe that the real estate sector is well-position to absorb such high interest rates. That’s because there’s a large increase in cash balances that occurred over the COVID-19 pandemic. Moreover, the high-record amount of home equity on the Canadian balance sheets indicates a sector that’ll manage the rate shock expected to occur.

Tip for Homebuyer: Low mortgage rates will make it easy for you to qualify for a mortgage, reduce your monthly payment, and make homeownership affordable. Fortunately, even with the rates creeping up, you still have some time to leverage the historically-low rates.

Call us today, and we’d be more than happy to link you with a trusted lending professional and start your homeownership journey today!

Read Also: tips for first time home buyers

Expect Low Volumes of Sales

It’s estimated that 656,300 homes were bought in 2021, which is an 18.8% increase over the previous year. However, this pace of sales is expected to slow down eventually. But the sales volume in 2022 will remain high by historical standards. In fact, while experts predict the number of home sales to fall by 12.1%, 2022 will still be the second-best year on record.

The relative slowdown has been attributed to lack of inventory and high prices, which are resulting in affordability challenges. However, note that COVID-19 shook up many people’s lives, and that has increased the churn rate in resale market. This might continue boosting housing activities above what was normal before the pandemic.

Tip for Homebuyers: The 2021 frenzied market required a drop-everything commitment for a buyer to find and buy a property. Hence, the slower pace of sales should come as a relief. But you should still be prepared to compete for the best real estate deals.

Our real estate experts can help you craft a captivating offer without compromising your needs, preferences, and budget!

A More Balanced Market

In 2021, the fears about COVID-19, work-from-home directives, and economic stimulus all triggered a huge increase in property demand. Moreover, most homeowners delayed their plans to sell and the shortage of labour and building material hindered new construction, which led to a low supply in the market. This high demand and low property inventory created one of the most competitive housing market canada ever. So competitive, that it resulted in an extremely imbalanced market, which profited sellers and frustrated many buyers.

In 2022, the real estate market is expected to be more balanced. The demand could soften gradually as high interest rates and home prices push homeownership cost out of reach for many potential buyers. Moreover, while inventory is still low, the pace of new constructions in Canada remains higher compared with historical averages.

Tip for Homebuyers & Home Sellers: If you struggled buying a home in 2021, there might be some relief in 2022. The softening demand could make it easier for you to finally buy your dream home. For sellers, it’s still an excellent time to cash out those big equity gains. And with slower pace of sales and less buyers’ competition, you might have an easier time finding your next place to call home!

Reach out to our pros for a free consultation, and let’s discuss your specific real estate needs and goals.

Read Also: how long does it take to sell a house

Home Prices Will Hike- But at a Slower Pace!

Home prices rose on a national average of 19.9% in 2021- this rate of appreciation is predicted to slow down in 2022. The Canadian Real Estate Association projects that home prices will increase by a national average of 5.6% to hit $718,000 in 2022. Other predictions show that the price growth will slow down and might reach a near standstill by the end of 2022.

However, potential buyers are advised against the “wait and see” mentality. That’s because affordability won’t likely improve as the prices and interest rates are still creeping upwards.

Tip for Homebuyers: If you’ve been waiting on the sidelines for prices to drop, you could be out of luck. Even if the prices will dip slightly, any savings you might have had will be offset by the higher mortgage interest rates. Fortunately, the decreased buyers’ competition could mean more home choices and less likelihood of bidding wars.

We’ll help you get the most out of your hard-earned money in today’s competitive market, call us now!

Your Local Real Estate Experts Will Guide You!

The national real estate housing market predictions Canada 2022 offer the big-picture outlook, but real estate is local. And as local real estate market pros, we can guide you through the ins and outs of the local market that are driving home values in your particular area.

Get in touch with us today if you’re thinking about buying or selling your home in 2022. We’ll work with you to craft an effective action plan to meet your real estate needs, budgets, preferences, and goals!

Thinking of Buying or Selling?  Call 778-800-2587

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