Even though Canada’s housing market is booming to many it feels like the country is in a perpetual housing crisis. Canadians, particularly those that don’t own a home, worry about skyrocketing prices, foreign ownership, supply chain issues, lack of inventory, numbered companies and corporations buying up what little inventory is available among a number of concerns.
There doesn’t appear to be any political or bank rate adjustments on the horizon to cool the pressure either. The government admittedly doesn’t have immediate answers. It will take “years” of work to tackle the challenges making Canada’s housing market so unaffordable, Finance Minister Chrystia Freeland warned on Tuesday.
Canada’s home values are one of the highest in the world and the overall market national assessment value hit $6.1 trillion in 2020, up 2.5% ($146.0 billion) from 2019. Canada’s nationwide housing is valued at over 300% of the country’s GDP. If we are comparing apples to American apple pie the USA’s is just 170% of its GDP. The majority of these valuations come from homes in Ontario and BC.
The Toronto market remains a catalyst. According to a report by Royal LePage “A large number of newcomers are also expected to enter Canada next year and many of them will settle in the GTA, putting upward pressure on prices.”
Inventory would have to double in Vancouver in order for the region to return to a balanced market, as demand continues to outpace supply. Homes are expected to see up to a 13% increase in 2022.
Greater regions of Toronto and Vancouver forecast to see highest aggregate price appreciation at 11.0% and 10.5%
Pent-up demand from buyers who were unable to transact in 2021 will lead the demand, coupled with the growing need for shelter from new household formation and newcomers to Canada, will continue to put upward price pressure on a market suffering from a chronic supply shortage. According to the Royal LePage Market Survey Forecast.
Canada has seen a record spike in home price appreciation during the COVID-19 pandemic, with national average home prices up 18 per cent in October compared with the same month in 2020, according to Canada Real Estate Association (CREA) data.
Winter won’t slow Greater Toronto market: will see condos continue to appreciate
In the Greater Toronto Area, the aggregate price of a home in the fourth quarter of 2022 is forecast to increase 11.0 per cent year-over-year to $1,256,500. During the same period, the median price of a single-family detached property is expected to rise 10.0 per cent to $1,564,200, while the median price of a condominium is forecast to increase 12.0 per cent to $763,800. The GTA is the only major region expected to see price appreciation in the condominium segment surpass detached homes in 2022.
“Condos in the city of Toronto and in the greater region have rebounded with vigour, after taking a harder hit than any other major urban centre in the country at the onset of the pandemic,” said Cailey Heaps, who leads the Heaps Estrin Team, Royal LePage Real Estate Services Ltd
Montreal will see an 8.0% increase in aggregate prices
In the Greater Montreal Area, the aggregate price of a home in the fourth quarter of 2022 is forecast to increase 8.0 per cent year-over-year to $564,800. During the same period, the median price of a single-family detached property is expected to rise 9.0 per cent to $648,600, while the median price of a condominium is forecast to increase 6.5 per cent to $447,300.
Greater Vancouver region expects a 10.5% increase with single-detached reaching 12%
In Greater Vancouver, the aggregate price of a home in the fourth quarter of 2022 is forecast to increase 10.5 per cent year-over-year to $1,375,700. During the same period, the median price of a single-family detached property is expected to rise 12.0 per cent to $1,892,800, while the median price of a condominium is forecast to increase 8.0 per cent to $766,800.
“We’ve been experiencing a chronic shortage of housing supply for over a year, and inventory levels are steadily decreasing. This continues to be a main driver of price appreciation in Vancouver and the greater region,” said Randy Ryalls, managing broker, Royal LePage Sterling Realty. “Just about every listing receives multiple offers and ultimately sells above the asking price, many without conditions. This competitive environment makes it especially difficult for first-time buyers to transact.”
Ottawa housing market will see a 9.0% increase as demand for green space grows
In Ottawa, the aggregate price of a home in the fourth quarter of 2022 is forecast to increase 9.0 per cent year-over-year to $806,600. During the same period, the median price of a single-family detached property is expected to rise 9.0 per cent to $946,100, while the median price of a condominium is forecast to increase 6.0 per cent to $446,300.
“Demand is continuing to outpace supply in Ottawa and I believe it will remain strong in 2022, although the frenzied pace of the market is reducing in this final quarter of the year,” said Jason Ralph, broker and president, Royal LePage Team Realty
Canadian Government plans?
The Canadian government said it’s working with the provinces, territories and municipalities to “unlock and create” more housing supply.
“The government has invested over $70 billion through the National Housing Strategy that will support the construction of up to 125,000 affordable homes and increase Canada’s housing supply,” the fiscal update said.
“Addressing the issues of housing affordability is a priority for the government.”
Without any real concreate solutions to build affordable housing we can expect that 2022 will be another massive year for the real estate market. The accessible one anyway.