Recently I was asked by a Buyer what is driving the real estate market so I thought I would write a blog post about it.
According to the Toronto Regional Real Estate Board (TRREB) there will be 110,000 sales reported through TRREB’s MLS system in 2022. This is a slight dip from the record sales of 121,712 in 2021.
The Average Selling Price for all home types will be $1,225,000 and that is a 12% increase from 2021.
The labour market is one of the main drivers of the real estate market. Many home buyers in the GTA are employed in economic sectors with above average earnings.
According to Stats Canada these sectors rebounded quickly from the negative impact early on in the pandemic. The outlook for overall growth in employment and job creation will continue in 2022.
The second driver of the real estate market in 2022 will be immigration. The number of newcomers to Canada is expected to rise in 2022. These newcomers will need a place to live and will either rent or purchase a home and this will have a positive impact on housing demand in 2022.
Another driver of the real estate market are the historically low interest rates. Low interest rates prevailed in 2021 and many buyers purchased sooner than they would have otherwise. The interest rates are expected to increase slightly in 2022 and the higher cost of borrowing will cause a slight dip in housing demand.
Moreover, the lack of inventory will result in lower sales in 2022 and higher prices. It is expected that the average sale price will go up by 12% in 2022. The number of active listings will be flat or will marginally decrease. The lack of choices available to the consumer will also result in home sales that were off the record setting pace in 2021. 2022 will continue to be a Seller’s market in Toronto and the GTA and in many surrounding communities.
The Rental Market will continue to be tight as a result of immigration and a good economy. Average rents will recover to the pre-pandemic levels or slightly above.
Covid-19 has created a lot of change in people’s lives. This change caused many people to work from home because they were not able to go into their work location. In addition to this, some home owners who were parents had to home school their children. These changes in the home work-life dynamic caused changes in their real estate needs. Many people moved out of the core of the city and sold their condos for townhouses and detached homes with larger living spaces. As long as Covid-19 is around there will continue to be change in people’s lives and it will continue to impact the demand for housing in a positive way. Thank you Larry Kendall for sharing your perspective on the impact of COVID-19 on the real estate market.
Blog Posted by: Bill Keay
February 15th, 2022