2021 has seen the Toronto real estate market explode. We’ve experienced price growth at a rate like never before. According to Kevin Crigger, president of Toronto Regional Real Estate Board (TRREB), housing prices have reached “a critical juncture” due to lack of supply and incredibly high demand.  

The pandemic has created conditions where prices rose significantly across all categories. The national home price average rose by 18.2 per cent when comparing October 2021 with the previous year. The Canadian Real Estate Association (CREA) reported that the average home price in the GTA rose 19.9% to $680,000 over the past year, with some municipalities having their home prices increase by nearly 30 per cent.  

So, what can we expect from next year?

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Interest rates remain low but are expected to increase next year.

Record low interest rates continue to make getting large home loans more achievable. The Bank of Canada was discussing a possible rate rise, however, it recently announced that it will be keeping the overnight rate at 0.25%. We anticipate that a rate rise to 0.50% will be announced sometime in the second or third quarter of 2022, with mortgage rates expected to follow suit. When interest rates begin to climb, we expect to see a slight backing off of demand.  

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Inventory remains low, demand high.

The housing market has been at a bit of a standstill. Sellers are holding on to their properties either waiting for the market to peak, or for them to find the ideal property to purchase before listing their property. This has created low levels of sale volume in a market with incredibly high demand that only continues to rise.  

Inter-provincial migration continues as more and more new residents flock to the GTA. With the borders once again open, international immigration is also becoming a renewed factor in price rises. More people are arriving in the GTA, which is only further increasing demand.  

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What we expect from 2022.

The extreme rate of price growth is beginning to fizzle. As we approach a new year, we will see home prices rise steadily, albeit at a slower pace. The CREA predicts that the average home price will increase by 5.5 per cent to $718,000 in 2022.

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Prices will drop, eventually.  

Some buyers have been sitting on the sidelines, afraid to get into an inflated housing market. However, even if home prices were to experience an unheard of 50% correction, prices would only return to where they were in 2014.  

When it comes to a housing market such as what the GTA is currently experiencing, there really are only two options. Either prices will need to go down or incomes will need to go up to keep pace with rising home prices. Because incomes aren’t increasing at the same rate as real estate prices, the only other alternative is for price growth to ease and for an eventual correction to take place.  

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The ideal time to list your property is now.  

If you’ve been considering listing your property, the beginning of the year is looking to be an ideal time to sell.  

Some of our clients are not comfortable putting their homes on the open market, they want more control of the sale process during a hectic market, and we get it. Our team is having a huge success selling off-market properties for our clients. Our network means that we can reach a large pool of buyers even when a property isn’t on the MLS.  

If you’re looking to either list your property or make it available off-market, reach out to a member of the Suzy Goldstein Team. We can help you take advantage of this once-in-a-decade seller’s market and get the best price for your property.