2022 Real Estate Predictions for Canadian Real Estate Market and Ottawa Real Estate Market
Canadian Real Estate Forecast for 2022
A recent RE/MAX report indicated that the Canadian real estate market will continue to be strong as we head into 2022. Residential home prices are expected to rise 9.2% in the coming year.
After interviewing agents and brokers, RE/MAX developed a comprehensive look at expected trends across the country. We’ll be focusing on living in Ottawa, of course, but we’ll also take a good look at what’s happening from coast to coast.
General Trends for Canadian Real Estate Market
There’s general agreement that a seller’s market will continue across Canada through 2022. Migration between provinces, which began to influence the housing market in mid-2021, is expected to remain a factor.
A recent Leger survey showed that nearly half, 49%, of Canadians believe the housing market will remain steady in 2022. Moreover, the same percentage feels that real estate is one of their best investment options.
That confidence is especially striking in light of the considerable supply challenges faced by markets across Canada. It’s also a reassuring marker during a global pandemic. It indicates that real estate remains one of the most solid foundations of the Canadian economy.
Trends in Ottawa
Brokers and agents living in Ottawa predicted trends for the area mirroring the nationwide outlook. After a blistering increase in average housing prices of 22% in 2021, the region expects a more moderate increase of 5% in 2022. There’s even a small anticipated drop from 2021 in the number of units sold.
That does not mean that Canadian realtors representing people moving to Ottawa expect a shift to a buyer’s market or anything other than a strong market throughout the coming year. While it may not see the explosive changes of 2021, it is expected to remain steady and solid.
Ottawa remains one of the more affordable urban markets in Canada. The average anticipated price of $679,915 for a home in Ottawa is about 58% of the cost in Toronto and 52% of the Greater Vancouver Area. Demand for those homes will remain high.
Ottawa realtors should expect to see inter-province migration and immigration grow in 2022. Price appreciation should continue to be strong in Ottawa and throughout Ontario.
Of concern in Ottawa and throughout the country is lack of supply. Combined with low interest rates creating increased demand, this makes for a complicated 2022 market for both Ottawa real estate agents and people moving to Ottawa.
We’ll be talking more about supply and demand later. This is the variable creating the greatest challenges in Ottawa and every other area across Canada.
Smaller Market Pricing Trends
One of the factors affecting Ottawa and other larger urban areas is an uptick in buyers’ interest in smaller markets. People working and living in Canada have more options than ever when choosing where to buy a home.
As the pandemic made it clear that many people do not need to work from an office, smaller markets have seen a steady increase in home sales. These markets have traditionally had lower price points and greater supply, making them attractive for remote workers.
Sudbury, for example, expects the same 5% price increase as Ottawa, but the average estimated home price for 2022 is $422,500. In Ottawa the average estimated price is $679,915.
That lower price point makes the smaller market attractive for first-time buyers who are able to work from home. Young couples and families in particular.
Others may look for lower prices and more detached single-family homes within commuting distance. The historic towns and villages that dot the Ottawa area’s Rideau River and other waterways could see more traffic if the trend toward smaller markets expands.
People moving to Canada, and moving within Canada, are seeking out these smaller markets in growing numbers. This trend will continue, and we will likely see rising prices and decreasing supply in those markets.
Ontario Pricing Trends
Turning our attention to the whole of Ontario, the province saw 2021 price increases ranging from a modest 8% in Toronto to a stunning 53% in Barrie. Those increases are expected to even out in 2022.
We’ll still see some extremes. Barrie should see prices decrease by 13% while Toronto is expecting a 44% increase. Even those numbers represent a return to stability rather than a lasting dramatic change.
While the range is still large, few areas are expecting to see prices rise over 20% in 2022, while 2021 saw very few below that mark. This is good news for prospective homebuyers who in 2021 were being squeezed out by rapid price increases combined with low supply.
Thunder Bay, with an expected price increase of 5%, is the most affordable area in Ontario, with the average home expected to cost about $300,000. Oakville, with an estimated average home price of just under $1,700,000, is the most expensive.
Ontario has a range of price points and an enviable combination of urban, suburban, and rural markets. As inter-province migration continues to be a trend into 2022, Ontario has a lot to offer.
Ontario’s biggest barrier to larger growth is a lack of housing inventory. Without a significant increase in supply, Ontario may see continued migration out of the province to more affordable markets to the east.
Nationwide Pricing Trends
Let’s turn to national pricing trends and predictions.
Canadian real estate prices boomed in 2021, with prices increasing by an average of 18.2% nationwide. The anticipated 9.2% average increase in 2022 represents a continued strong and steady market without some of the pandemic-induced volatility of 2021.
Western Canada is expected to see continued migration to markets like Victoria and Nanaimo. Buyers are looking for larger properties with lower price points. Winnipeg is likely to see a continued influx of young home buyers looking for detached homes.
The Vancouver area is also likely to see continued growth. The area benefits from both Canadian migration and international immigration. Alberta is expected to see greater economic growth than any other province, which in turn should drive a healthy, active real estate market for buyers and investors.
Calgary and Edmonton shifted to seller’s markets in 2021, with sales increasing by 76% and 43% respectively. With relatively small price increases of 8% and 4%, these areas became increasingly attractive to homebuyers moving between provinces.
The projected 2022 price increases of 2.5% for Calgary and 7% for Edmonton are likely to encourage continued inter-provincial migration to these areas. Winnipeg, with its projected 3.5% price increase, offers the most affordable average home prices in Western Canada at just over $322,000.
Atlantic Canada saw significant migration from Ontario in 2021, a trend that is expected to continue. Even with most areas experiencing greater than 20% price increases in 2021, the average home prices remain among the most affordable in the country.
Moncton, which experienced a 27% increase in 2021 and is expected to see a further 20% bump in 2022 still has an average projected home price of slightly over $330,000. Compared to the $1.1 million average price tag in Toronto and the nearly $1.3 million in Vancouver, it’s easy to see why first-time homebuyers are attracted to eastern locations.
Remote workers looking to enter the housing market may be tempted further by Saint John with an average predicted price of just over $275,000, Fredericton at just under $270,000, and Southern Nova Scotia at just a hair over $250,000.
Supply and Demand
As we turn our attention to supply and demand it looks like we’ll continue to have an excess of one and a shortage of the other. The projected continuation of low interest rates and pandemic-era savings increases will drive high demand for both first homes and those who want to move up in the housing market.
This high demand has run head on into an already low supply of available units, particularly detached single family homes. Canada suffered a housing supply shortage long before the pandemic. Now it is becoming an increasingly troublesome issue.
Young families will continue to find it difficult to enter the housing market as prices rise, even more modestly. Those looking to move up will be stymied not only by price, but also by the simple lack of homes available.
Another demographic that faces a difficult market heading into 2022 is people who want to downsize into smaller homes. While they may be able to sell their current larger homes, they will be faced with an uphill battle to find a suitable smaller home.
Of the 62% of Canadians who currently own a home, and the 72% who said rising prices did not affect their home buying decisions in 2021, the low inventory of available homes is still going to be a roadblock.
The construction industry has responded to the low supply of affordable housing, and as those units are completed in 2022 a bit of the pressure may be relieved. But for homebuyers, the high percentage of rental apartments currently under construction will not address their problem.
Also affecting the ability of new construction to meet demand is continued supply chain problems caused by the pandemic. Housing completions are slower and materials are more expensive.
The number of sales in Ottawa, which rose 10% in 2021, is projected to fall 2% in 2022. The shortage is a nationwide issue, with no area being completely spared.
Ottawa real estate agents face a challenge in this market. While helping clients sell a home may be quick and painless, helping them find a new property may be quite difficult.
While the overall real estate market is strong, this lack of supply creates a barrier to even greater growth.
Putting it All Together
Now that we’ve looked at numbers and projections for Ottawa and the rest of Canada, we can turn back to the overall outlook for Canadian real estate in 2022.
We can see that 2021 was a turbulent year, with pandemic effects showing up in soaring prices and increased inter-provincial mobility. Supply chain issues continue to affect the construction of new homes.
But we also know that Canadian real estate, particularly Ottawa real estate, has a tendency to cycle through spikes that are followed by an evening out of prices. Ottawa was set to hit one of these seven to ten year spikes before the pandemic.
The uncertainty and rapid price increases during the pandemic combined with this predictable cycle of rise and fall. The result was a rather large spike compared to what might have been anticipated pre-pandemic. Yet we are still seeing the leveling out that is common after a spike.
Despite the challenges of the pandemic and supply shortages, the Canadian real estate market remains strong and stable. This is a testament to the solid foundation of real estate as one of the bedrocks of the Canadian economy.
Canadians remain confident in the market and in their real estate investments. Homebuyers are encouraged by low interest rates to enter the market and they are not being deterred by higher prices and low inventory.
Heading into 2022 we expect to see continued stability and growth in the Ottawa real estate market and beyond. The rapid rise in prices is expected to level, helping first time homebuyers.
We also expect homebuyers to continue looking to smaller markets. Larger properties, lower price points, and the ability to work remotely make these areas attractive. These markets are likely to see rising prices and decreasing supply as they remain popular for inter-provincial migration.
People moving to Ottawa and living in Ottawa will continue to enjoy its relatively reasonable prices along with its expansive geographical area and diversity. Low supply will cause headaches for new buyers as well as potential investors.
The Canadian real estate market will remain a seller’s market in 2022. Unless supply increases dramatically, there will still be first-time homebuyers squeezed out of the market in every area.
The Bottom Line for Canadian Real Estate Market
Looking at numbers and charts and projections helps every Ottawa real estate agent better serve their clients.
Understanding the challenges for homebuyers helps us come up with innovative solutions and find the perfect property for every buyer. We can continue to steer first-time homebuyers to smaller, more affordable markets. We can make sure that downsizers know that detached homes are not their only options.
By understanding national trends we can help those living in Ottawa and moving to Ottawa make the most of their options both in and out of the area. Whether your clients are buyers or sellers, these projections help them make informed choices.
While the diminished supply of available properties will continue to be an obstacle for both buyers and sellers, it is reassuring that the market is projected to remain strong. Experienced realtors can help every client navigate a complicated market.
Until we have a real influx of new homes, supply will remain an area of concern. Knowing what the market has in store for next year helps us find solutions for the first-time buyer, the homeowner who wants to move up in the market, and those downsizing.
Ottawa has not been immune to the challenges of the current market, but the area offers plentiful choices for both urban and suburban living. Rural markets outside of the city offer lower price points and a slower pace that appeal to young families and downsizers.
For every challenge there is an opportunity. Canadian real estate is poised to have another strong year as people enter the market, invest, and even reevaluate what they need in a home.