Toronto real estate broker Cailey Heaps recalls how concerned she was at the start of the pandemic about whether her broker would be able to keep her agents employed.
“Now I look back and think it is extraordinary to me that the pandemic has proven to be the main driver of one of the strongest housing markets we have ever seen,” he said.
Now, with the emergence of the Omicron variant, he expects COVID-19 to continue to stoke pandemic concern in the region with a housing market that has been ablaze since the end of the initial shutdown in spring 2020.
Both Royal LePage and Re / Max predict that 2022 will be another year of double-digit price growth and seller markets, not just in the GTA but in most of the country.
Re / Max Canada is calling for home prices to rise about 9.2 percent next year. President Christopher Alexander says Toronto-area markets will range from 7 to 8 percent in Durham and Brampton, respectively, to 10 percent in Toronto and 14 percent in Mississauga.
Royal LePage predicts Canadian prices will rise 10.5% year-on-year in 2022 and the GTA is expected to see an 11% rise in home prices.
“The double-digit increases in house prices are not disappearing, but it’s not 20 percent, it’s 10 percent,” said CEO Phil Soper.
That growth is being driven by the same trends that have driven the market during the pandemic, said Heaps, who represents Royal LePage.
“Features that buyers will look for in the home include space and easy access to the outdoors – the concept of having a home based on lifestyle. Having your farmhouse and home in one has become a priority at the top price point. That means manicured patios that allow you to entertain privately at home. People really crave a lot of natural light, ”he said.
Heaps expects the busy fall of 2021, which saw record sales and price increases, to continue into the winter.
“There is still a lot of leftover demand from 2021 that has not been met as a result of a lack of inventory,” he said.
“Next year will be a little quieter, but due to the housing shortage, prices will keep going up,” Alexander said.
John Pasalis, president of Toronto Realosophy, expects 2022 to open with a highly competitive market in the first quarter.
“It tends to have the highest number of buyers in the unlisted market because not many people trade in January. My instinct is that it will be a continuation of what we have now, which is like a super, super competitive market, ”he said.
“The only thing that will be difficult to predict when we think about the causes of the market slowdown is potentially just buyer fatigue. If people start thinking, ‘I’m tired of this. This is ridiculous, this is too expensive, I’m out, ‘that could definitely take some of the heat off the market,’ he said. “But for now, it is still quite active and will probably continue to be active into the new year,” Pasalis said.
Here are some of the trends industry experts told Star they expect to see in the 2022 real estate market.
Condominiums
Having lagged behind in the pandemic real estate market, the condo sector has largely recovered and prices will likely rise by at least 10 percent in 2022, said Shaun Hildebrand, president of development-tracking market research firm Urbanation. .
He bases his prediction on a less than a month supply of resale units and prices that at year-end were appreciating by about 20 percent per year.
But the high prices of single-family homes mean that the gap between a condo and a single-family home also tops out at around $ 850,000.
“Now you can effectively buy two condos, with money to spare, for the price of buying a separate home,” Hildebrand said.
“Average prices for independent products are above $ 1.6 million. Even a semi-detached, semi-detached or semi-detached home, prices are in excess of a million dollars, so condos have gained an affordability advantage that will work in their favor in 2022, especially when interest rates start to rise and affordability takes a hit. affected, “he said.
A record year for pre-construction condo sales in 2017 will translate into a new record for condo completion in 2022 with approximately 30,000 scheduled for occupancy, Hildebrand said. He doesn’t expect the industry to be able to offer that many, but there will be enough new investor-owned units to boost rental inventory and “prevent rents from completely selling out next year,” he said.
This year there were about 16,000 condo completions and about 22,000 in 2020.
Heaps says the search for more square footage, dedicated home offices and outdoor spaces shifted the market from condos to single-family homes early in the pandemic.
“That change is now normalizing a bit. People are more comfortable going back to the condo market, ”he said.
But they still want more space, and particularly at higher prices that can translate to an advantage for older buildings.
“Customers who come from some of the more established neighborhoods in downtown Toronto, be it Moore Park, Rosedale, Lawrence Park, Bridle Path, etc., really want to enter buildings that have a prime location, excellent floor area and layout, and ideally some kind of protected view. To get that combination, you usually have to go back to the old condos, ”he said.
Rents
Hildebrand expects condo rents to grow 5 to 7 percent in 2022, restoring them to pre-paid levels of around $ 2,400 or $ 2,500 per month.
“Relative to the cost of buying a median-priced condo and having a mortgage and condo fees and property taxes, (renting) is still quite a bit less expensive than the property side,” he said.
Specially built apartment vacancies, which peaked in the first quarter of this year at about 9 percent, had fallen to about 4 percent by the end of the year. Hildebrand expects them to drop to about 2 percent by the end of 2022 or early 2023.
There are 6,500 specially designed rentals due for completion next year, the highest number in more than 30 years.
Investors
Realosophy’s Pasalis says rents will play a role in determining whether Toronto housing continues to attract so many investor buyers, an area of concern as Teranet showed that nearly 30 percent of home buyers own more than one property.
That’s a worrying trend, Pasalis said.
“When you have a disproportionate number of investors, you just create bigger ups and downs because (investors) push prices higher than they should be. Then the second the market cools down, they end up driving prices down more than they should, “he said.
In 2018, the Bank of Canada used neighborhood data from Realosophy to show that the areas with the biggest drop in prices after the 2017 home spike had the highest levels of investor homeowners. Areas without much investment activity did not see a drop.
Royal LePage CEO Soper downplayed the impact from investors, saying they remain a small part of the housing market if home fins are the concern.
“People are confusing a good, solid homeowner who is buying a condo or two as an alternative to an RRSP, for fins,” he said.
“As homes appreciate at a slower rate, as the threat of rising interest rates looms, it doesn’t seem like a very fruitful market for those wicked homebodies,” he said. “No one has pointed to data linking real estate investment to widespread house price inflation.”
Suburbs and beyond
Interest in the suburbs has been strong since the start of the pandemic with home buyers seeking more space to work and study and forecasters hope that will continue.
Royal LePage’s Heaps says Toronto’s supply shortage that drove up home prices in the city means buyers have to decide whether to commit to square footage or move to the suburbs to get the space they want. .
“With the ongoing pandemic and then the new mindset that home is a place to live and work, people are much more open to being in the suburbs because it doesn’t involve the commute that it used to involve,” he said.
Heaps also believes that Omicron will discourage pressure for people to return to their offices, which will continue to drive demand for suburban housing.
Re / Max’s Alexander said the pursuit of affordability will almost certainly extend the other trend on the move, which is outside the province.
“Atlantic Canada is experiencing a little boom right now,” he said. “The only thing they really lack from a comfort perspective is a professional sports team. Halifax has amazing restaurants, great entertainment. There’s a buzz there, ”he said.
Single family homes
Single-family homes have seen the biggest gains in the pandemic with the median home price in Toronto hitting $ 1.8 million in November, Alexander said.
“That level will be increasingly difficult to maintain. I didn’t expect 2021 to be as strong as it was, but I think that despite the price increases, there is a feeling in the market that it is a little less hectic and buyers are doing their due diligence and there is not this emotional overwhelming. . ,” he said.
Listings
The lack of listings is the main reason why home prices in the Toronto area continue to rise, according to the Toronto Regional Real Estate Board.
Royal LePage’s Soper said people want to move but are terrified that they will sell their home and won’t be able to find another, but the recent narrowing down of multi-offer scenarios could prove psychologically helpful.
“Even if only three other people have bid, instead of 30, that gives people a lot of comfort. I think there will be a little more balance. But it will not be a balanced market, “he said.
Until there is a financial crisis, something it did not expect, Canada will be stuck in a seller’s market due to chronic housing inventory shortages, Soper said.
Reference-www.thestar.com