What can we expect from Canadian Real Estate?
There are 5 determining factors that indicate where the housing market is headed.
HOME PRICE INCREASES MAY LEVEL OFF NEXT YEAR
The Canadain Real Estate Associaton predicts the national average home price will reach $677,774 by the end of 2021. This figure represents a 19.3% increase over last year. However, we will see the average home price reach $681,500 representing an increase of 0.6% in 2022.
WHAT DOES THIS MEAN FOR YOU?
If you are a homeowner thinking of selling, now might be the perfect time. Low inventory, where demand exceeds supply puts sellers in a strong position and could result in a sale above the list price.
HOME SALES ARE TAPERING OFF
The Canadian Real Estate Market expects a slowdown in home sales activity in 2022. An estimated 682,900 properties are expected to trade hands through the Canadian Multiple Listing Service systems in 2021, increasisng 23.8% from 2020.
WHAT DOES THIS MEAN FOR YOU?
Buying a home can be difficult in today's highly competitive market. Purchasing a home in 2022 may be an alternative as you may face less competition but you should be prepared for increased mortgage rates.
SUPPLY OF HOMES REMAINS LOW
The housing shortage in Canada continues. According to the Canadian Real Estate Association, prior to the pandemic the number of available houses nationally was at a 14 year low and the number of months of inventory was below four months. Inventory refers to the number of months it would take for the supply of homes on the market to be sold at the existing pace.
WHAT DOES THIS MEAN FOR YOU?
A low supply of available homes coupled with a high demand for housing gives sellers the upper hand. Home owners could see higher offers whenever demand exceeds supply.
HOME CONSTRUCTION ON THE VERGE OF STABILIZING
The number of new home builds projected in Canada for 2021 is 230,000. The projection is even higher for 2022 (234,500) and 2023 (231,900).
WHAT DOES THIS MEAN FOR YOU?
An influx of new homes on the market creates more opportunity for home ownership. Construction boosts the supply of available properties and eases demand.
MORTGAGE RATES ARE SET TO RISE
Low interest rates entice buyers to purchase homes. The trend of low mortgage rates has stayed steady. Although, mortgage rates are expected to rise this year and next year and even into 2023. Five year Canadian mortgage rates are expected to stay low however, they are expected to continue rising in 2022 and 2023. The fixed rate for a five-year mortgage could climb to 3% in the third quarter of 2022.
WHAT DOES THIS MEAN FOR YOU?
Considering the potential of increased mortgage rates for the remainder of this year and into 2022, now might be the perfect time to consider borrowing funds to buy a home. You can lower your risk by locking in a fixed-rate rather than a variable-rate mortgage.
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