MISSISSAUGA, Ontario, Jan. 25, 2022 (GLOBE NEWSWIRE) -- Latest 2021 statistics released by the Canadian Real Estate Association (CREA) show an extraordinarily strong past year with home sales reaching higher than expected despite property supply hitting an all time low. On an annual basis, Canadian home sales were at 666,995 (residential properties) completed transactions crossing the previous year's record set by 20%. Not many people expected this past year to be so strong primarily due to the COVID pandemic affecting the Canadian and global economy.
We expect the robust growth story to continue well into 2022 and the 5 factors that will influence the Canadian housing market will be:
1.The first quarter of 2022 may be slower due to lack of supply; in fact, supply is at its lowest point this year when compared to previous year's inventory on a national level. There is currently less than two months of inventory on the national market. It has been only 4 times that these record-breaking low levels of inventory have occurred, and all have been in 2020-21. Supply will be an extremely critical area to watch in the next few months and it certainly is not a quick fix. Affordable housing units continue to lag way behind the demand and has been a chronic issue in Canada and the pandemic only exacerbated an existing problem and brought it more to the forefront. P.M. Trudeau has promised to build more affordable homes across the country. Government measures and Election promises are all well and good, but these measures are too little too late. We need to act fast to address the growing supply-demand gap. Construction is beleaguered with labour shortages, supply chain issues, rising costs of construction material all linked to the COVID pandemic still lingering and bringing new variants. As a result, many builders are still sitting on the fence hesitant to start new projects without some signs of more stability and less interruptions.
2. Canada needs immigration to drive the economy and to support our aging population; if one accepts this fact then the number of immigrants admitted into the country will keep rising. The Honorable Minister of Immigration, Refugees and Citizenship (IRCC), Sean Fraser, announced that more than 401,000 new permanent residents landed in Canada in 2021. 75% of Canada's population growth comes from immigration and thus addresses shortages in the crucial sectors of healthcare and technology. Canada aims to welcome 411,000 in 2022 and 421,000 in 2023. (Govt of Canada IRCC).
What does this mean for the real estate sector? The first requirement for immigrants is they all need housing and whether it is to rent or buy, it will drive up and sustain demand. In the rental properties market, there will always be investors and for buyers it is still affordable because many of them are highly trained and have access to 6-figure incomes. Research indicates that 26% of Canadians would like to build their own home or go into pre-construction sector to take advantage of the historic lower mortgage rates before BOC raises the rates. The national average home price was $713,500 in December 2021 which is up by 17.7% from the same month in 2020 (Source CREA) the national average price is influenced by 2 major markets Greater Vancouver, Toronto & GTA which are Canada's two most active and expensive housing markets; excluding Vancouver and Toronto can cut down the average housing price by $150,000. Canadian cities have seen upward trends in new real estate supply (including new subdivisions) taken by investors for rentals.
3. Home prices will continue to rise upwards because of supply issues, rate hikes, and COVID pandemic. According to CREA, national prices will rise 9.2% by the end of the year 2022. Mr. Raman Dua, CEO and Founder of Save Max., sees prices rising north of 10% (double digit increases) and in the areas of more affordable homes like condos and townhomes that will see the highest price increases going into the Spring market especially in Toronto and GTA area.
Looking deeper into the housing types, the national median price of single family detached home rose 21.1% year over year to 811,900 while condo price rose 15.8% year over year $553,800. The highest price increase was seen in Ontario where detached homes gained 44.3% and, Kingston, ON where it saw a 38%. B. C saw an increase of 25% year over year (outside of Greater Vancouver). The current trend of migration between provinces has also fueled up markets outside the major provinces B.C, ON and QC and will continue well into 2022. Atlantic Canada is slated to be one of the fastest growing markets with this interprovincial migration with Moncton and Halifax at 20% and 16% respectively.
4. Bank of Canada interest rate hikes may not be as steep as expectations. Let us examine the current mortgage rate as 2.5% fixed and variable at around 1%. Keeping this in mind, the BOC, has advised banks to conduct stress test at 5.25% to qualify potential home buyers. This means that the Canadian home buyer can well weather the upward rise of interest rates. Expectations from BOC for 2022 are set at 4 to 5 interest rate hikes each approximately 0.25% depending on key factors such as inflationary trends, labour market, pandemic situation and some more. The next BOC announcement is due on 26th Jan 2022. However, there is a 50% chance that the first rate hike we could see would be in March 2022. Interest rates cannot go up rapidly due to fear of causing a recessionary phase. Clients looking for homes want to get in before the rate hikes hit the market, so we expect a strong and early Spring market.
5. Technology in real estate sector has sped up buying and selling transactions and will continue to play a significant role going forward. With online virtual tours for listings on real estate apps becoming de rigueur with the pandemic restrictions and lockdowns, we must change the way we do business and move with the times as clients are not going to go back to the traditional way of home selling and buying. Canadian real estate portals are reporting 200% to 500% increase in requests for virtual home tours in 2020 - 2021. Last year Springtime saw a decline of 35% in users reaching out to agents in just one month. Success for real estate agents will increasingly depend on online presence and transitioning into the digital and virtual spaces for promotions, listings, and processing transactions not only in the buying/selling markets but also in rental markets. Landlords and property managers across Canada are requesting to use 3-D virtual tours for potential clients to view floor plans, rental leases, and street views for their rental listings. Technology and transaction software has resulted in speeding up of closings and shortened the time from listing to offer to sale/purchase stages. This results in less time spent in manual document processing and spent in travelling to and from properties and as such realtors can focus on closing and taking on more deals increasing the sales for the year.
Raman Dua, CEO & Founder says, “Save Max is bringing new platforms and adapting to the changing times to increase sales on a year-over-year basis. We have realized the potential of implementing technology and applications in real estate. In 2022, the focus for Save Max will be incorporating a seamless digital CRM platform increasing end-to-end efficiencies. This is a win-win situation right from real estate agents to lead generation to back-office processing. Save Max is forging new pathways to redefine the real estate industry and emerge as a strong leader.”
For further information, visit www.savemax.com or call 905-459-7900.
About Save Max Group of Companies
- Since opening in 2010 has completed $7 billion in transactional value with over 10,000+ transactions
- Franchise Network of more than 50 offices in Canada and India with 600+ Realtors® looking to expand further worldwide to the US, Australia, New Zealand, Philippines, China and beyond
- Recently launched commercial division to support the diversity of its clients’ needs
- Committed $2.5 million to Trillium Health Partners demonstrating its broader benefit and love for the community by being more than just a real estate company but leaders that care
- Save Max sponsored the Naming Rights to the former Brampton Soccer Centre now known as the Save Max Sports Centre taking responsibility for its upkeep and maintenance
- Raised funds for Front Line workers through COVID through various fundraising initiatives and donated to William Osler Health & Trillium Health Foundation.
Media Contacts
Loveleen Dhiman
Director-Marketing, 905-459-7900 Ext 122, loveleen@savemax.com
Nita Balani
Executive Assistant, 905-459-7900 Ext 170, Nita.balani@savemax.com
