So, what comes next for Canadian real estate?<\/p>\n
Lenders, economists and brokerage firms have been releasing predictions for the coming year. Some are optimistic with respect to what lies ahead, while others remain concerned about rising housing prices and market shortages.<\/p>\n
With myriad issues affecting the market \u2014 COVID-19 being the largest disruptor \u2014 combined with rising costs and interest rates expected to increase next year, many potential investors and homebuyers are counting on research-based opinions to steer them in the right direction as they prepare for the big decision on whether to make that ultimate purchase.<\/p>\n
In the past few weeks, four major voices in the real estate market have released their 2022 forecasts : CBRE, RE\/MAX Canada, RBC Economics and Royal LePage. Here\u2019s a breakdown of how each outlet is predicting what will happen next year.<\/p>\n
RE\/MAX Canada<\/strong><\/p>\n In its 2022 Canadian Housing Market Outlook Report, RE\/MAX Canada outlined some of the trends and changes we could expect for real estate come the new year.<\/p>\n In light of housing supply shortages, which will ultimately put pressure on prices, RE\/MAX Canada predicts that there will be a 9.2% increase in average residential sales prices across the country in 2022. Migration between provinces is expected to also be a key driver of buying and selling activity in many communities.<\/p>\n In Ontario, market activity is expected to \u201cremain steady,\u201d next year, but with varying levels of price growth across the regions. Larger markets in the province could see returning immigration place pressure on supply levels and prices. Ottawa, Toronto, Mississauga and Durham Region could see average prices climb 5%, 10%, 14% and 7% respectively in 2022. In smaller communities such as Muskoka and Thunder Bay, the move-over trend is anticipated to help drive average sale prices up by 20% and 10%, respectively.<\/p>\n Out west, Calgary and Edmonton saw their markets flip from balanced in 2020 to a seller\u2019s market in 2021, which is expected to continue in 2022. This trend was caused by homebuyer demand from inter-provincial migration from Ontario and British Columbia. Buyers looking for larger properties flocked to communities in Victoria, Nanaimo, Regina and Kelowna, a pattern that will sustain demand and price growth in 2022, RE\/MAX Canada predicts.<\/p>\n From a price perspective, the Greater Vancouver Area, Calgary, Edmonton and Victoria could see average prices jump 5.5%, 2.5%, 7% and 7% next year.<\/p>\n All of Atlantic Canada\u2019s markets are currently in seller\u2019s territory, which is expected to prevail in 2022 with the exception of Charlottetown and Southern Nova Scotia. Large urban communities such as Moncton, Halifax and St. John\u2019s have experienced a rise in out-of-province buyers, mainly from Ontario, who come seeking greater housing affordability. Average sale prices in Atlantic Canada could increase between 5% to 20% next year.<\/p>\n RBC Economics<\/strong><\/p>\n According to RBC economist Robert Hogue, potential homeowners should expect anticipated price growth in the near future but he also pointed out that housing price pressures would see some relief by the second act of 2022. \u201cWe expect extremely tight demand-supply conditions will keep prices under intense upward pressure in the near term though we see such pressure easing significantly by the second half of 2022 as markets achieve a better balance,\u201d said Hogue.<\/p>\n Early reports from real estate boards showed that the temperatures of markets were \u201cgenerally rising once again\u201d as resales climbed to high levels in November. In communities like Toronto or the Fraser Valley, where resales were unchanged or had dipped slightly last month, this was mostly attributed to a lack of supply, not falling demand, Hogue explained. Although market trends over the past three months have flipped from the cooler periods recorded during the spring and summer, Hogue said that it is unlikely we\u2019re seeing another \u201cleg up in the market\u2019s unprecedented run.\u201d Instead, the current activity we\u2019re witnessing is related to buyers \u201cfront-running interest rate increases,\u201d a short-lived trend that is expected to fade in the coming months and lead to moderation.<\/p>\n \u201cOur view remains that deteriorating affordability (arising from soaring prices or higher interest rates, or both) and easing pandemic restrictions will gradually cool demand in 2022,\u201d said Hogue.<\/p>\n Royal LePage<\/strong><\/p>\n The brokerage predicts that home values are expected to \u201crise strongly again in 2022, however at a slower pace compared to 2021.\u201d The Royal LePage Market Survey Forecast predicts the aggregate price of a home in Canada will rise 10.5% on an annual basis in 2022, up to $859,700.<\/p>\n By housing type, the median price of a single-family detached property would increase 11% to $918,000, while the value of a condo would grow 8% to a median price of $594,000.<\/p>\n Royal LePage noted that pent-up demand from buyers who were unable to purchase in 2021, combined with the need for housing from newcomers to Canada and newly-formed households, would put upward pressure on prices in a market that is suffering from a \u201cchronic supply shortage.\u201d Meanwhile, heightened immigration targets from the federal government are likely to boost housing demand in large urban communities. Pent-up demand is expected to continue throughout winter, bleeding into the 2022 spring market.<\/p>\n \u201cThe lack of housing supply in Canada is a very real issue; one that cannot be solved overnight. While some believe that housing is now overvalued, signals point to a level of demand that will continue to outpace inventory, keeping prices rising on a steep upward trajectory,\u201d said Phil Soper, president and CEO of Royal LePage, in a press release.<\/p>\n \u201cThat said, I do expect to see price appreciation ease from the unhealthy levels that we have been grappling with over the last 18 months.\u201d<\/p>\n In the Greater Toronto Area, the aggregate price of a home in Q4-2022 is expected to increase 11% annually to $1,256,500. In the same timeline, the median price of a single-family detached home will rise 10% to $1,564,200, and up 12% to $763,80 for condos. This is the only major region where the price appreciation of a condo is anticipated to exceed single-family homes, Royal LePage said.<\/p>\n In Greater Vancouver, aggregate prices in Q4-2022 are forecasted to jump 10.5% year-over-year to $1,375,700. Single-family detached homes will see the median price rise 12% to $1,892,800, and 8% to $766,800 for condos during the same period. The Greater Montreal Area is expected to see aggregate prices in Q4-2022 increase eight per cent to $564,800. The median price of a single-family detached home will rise 9% next year to $648,600, and condos up 6.5% to $447,300.<\/p>\n CBRE<\/strong><\/p>\n In its 2021 Canadian Real Estate Lenders\u2019 Report, CBRE stated that lenders are feeling more optimistic about the real estate sector, a \u201csignificant shift\u201d in lender sentiments over the past two years. As a result, two-thirds of lenders are planning to increase their portfolio allocations to real estate lending in 2022 and the remainder will maintain their current allocation levels, according to CBRE.<\/p>\n The report, which surveyed domestic and foreign lenders from early October to November, was generated to gauge lender confidence in commercial real estate and Canadian financing outlooks for 2022.<\/p>\n With the pandemic dominating most of 2020, many lenders were hesitant to make real estate deals. However, \u201cincreased clarity in the market\u201d has prompted lending conditions to return to normal, with 90 per cent of lenders planning to \u201cactively\u201d or \u201cvery actively\u201d bid on deals over the next 12 months.<\/p>\n This renewed bullishness from investors would translate into 10% to 20% of additional net new capital available for Canadian real estate next year. Approximately one in two lenders plan to materially increase their loan books by releasing 20% to 30% net new capital in the year ahead. Looking into the future, this means that borrowers can anticipate stronger capital availability for their real estate financing needs in 2022, CBRE said.<\/p>\n