Canadian Real Estate Trends to Watch in 2022
Today let’s talk about 2022 and the Ottawa and Canadian real estate markets. No one could have predicted the roller coaster of events of the past two years. Upheaval due to the COVID-19 pandemic confounded our expectations. Let’s review the Canadian Real Estate Trends to Watch in 2022.
What we initially thought would be a large and lasting decrease in home sales only stuck around for a few months. By the late spring of 2020 demand began to rise, and with it, prices. Throughout the entirety of 2021, we saw increasing demand, increasing prices, and rapidly decreasing supply.
These conditions were not only present in Ottawa. Every single market in Canada saw home prices rise in 2021.
As we head into 2022, things are different. We know more about the virus, and some aspects of life are returning to what you could call a new normal. So what does that mean for real estate?
Let’s take a look at a few trends from the latest RE/MAX report. This is what industry experts predict will influence the market in 2022.
First of all, that rise in prices we saw in 2020 and 2021 is probably going to stick around. The RE/MAX analysis did not expect a repeat of the explosive, double-digit growth of the past two years, but prices are expected to continue their rise across the country.
Prices won’t go up at the same rate from market to market. The prediction is a range from 2.5% in Calgary to 20% in Muskoka. Smoothing out the peaks and valleys leaves us with a predicted average home price increase of 9.2% nationally.
The housing market is not immune to inflation. We’ve seen consumer prices rise on all sorts of goods and services due to COVID. Hopefully we’ll see inflation level off.
What about some of the factors that drove the housing surge we saw in 2021? At least two of them are expected to still be in play: interest rates and supply.
Interest rates were cut in March of 2020 at the beginning of the pandemic. They haven’t gone up since, but that’s expected to change. As early as April, the Bank of Canada may be looking at raising those rates.
That prediction is based in large part on the economic recovery that has been ushered in by vaccines and the resumption of business across the country. Everyone is hopeful that Omicron doesn’t reverse those gains.
But we also know that the real estate market has shown itself to be very resilient in the face of lockdowns and other public health measures. Only the very beginning of the pandemic saw a decline in activity. It’s been full steam ahead for real estate ever since.
But what about those interest rates? Traditionally, a rise in interest rates comes with the risk of cooling off a hot market. But the estimates have been that the rise will only be around 1% total for the year. With high demand and short supply, that increase is unlikely to push too many buyers out of the market.
HOUSING SHORTAGE – Canadian Real Estate Trends to Watch in 2022
The shortage of affordable homes was one of the largest driving factors of increasing prices last year.
The focus of both national and provincial elections, the supply of affordable housing has not seen much improvement. With experts predicting the immigration of 1.2 million people to Canada by 2023, supply will remain an issue.
Those living in Ottawa see firsthand the difficulty of finding an affordable home. Moving to Canada is going to be more difficult unless some strategies are enacted to relieve the supply crunch.
RE/MAX executives have put forward some solutions to the supply problem that was brewing long before the pandemic. They suggest more coordination between federal, provincial, and municipal governments to develop a national housing strategy.
They also believe that incentives can help people over some of the hurdles that currently exist for both new construction and selling existing homes.
The suggested incentives come in the form of cutting out some of the bureaucracy for builders and easing the financial burden for potential sellers. Tax rebates are proposed for both groups.
Another way to ease the supply shortage in major cities is to focus on growing the economies of smaller markets. The world has changed and not everyone needs to live in a major metropolitan area. Remote work has increased interest in smaller cities and towns.
The interest is already there. The government has a subset of homebuyers who want and are able to live in smaller markets, but it has to do more to reach them and boost the desirability of the areas in question.
Of the last two trends to watch, one is predictable and the other is new and exciting.
As you would expect from everything we’ve talked about, industry experts predict that the seller’s market will continue. Even if everyone pulled out all the stops and started adding to the housing supply today, it wouldn’t be enough to create a buyer’s market before the end of the year.
Intriguingly, another trend the experts are looking at is virtual transactions. Just as offices discovered that they could function remotely, so did real estate agents and home buyers and sellers.
Digital paperwork and virtual tours are not likely to go away. They’re convenient and easier than previous processes. They allow more people to see more homes in more areas, using less time. Why would anyone want to give that up?
Think of the smaller markets and how they can benefit from these changes and advances in technology. A family can look at houses all over the country instead of choosing a single location for their search for the perfect home.
That’s not to say that people are going to be snapping up houses sight unseen. But it does mean that there is greater flexibility within and between the housing markets. Living in Canada doesn’t have to mean choosing between Vancouver, and Toronto. And living in Ottawa might mean choosing a small town an hour from the city center.
2022 has started strong for the real estate market and predictions are that it will remain so through the year. If you’re moving to Ottawa or selling your home in the area, we’ll help you through every step of the process.