Canada’s housing inflation is going to soar ahead in 2022

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It looks like Canada’s housing inflation is going to soar ahead in 2022. Projections from the Real Estate biggies such as Royal Le Page are predicting spikes of 10%. Now this doesn’t sound like a lot but when prices are already elevated this means huge rises. Shortness of supply and reopened immigration will spur on the rising prices to put a roof over your head. Great news for a property owner but dire for those seeking a home in Canada.

Not only has the prediction been made for 2022 the big boys of Real Estate are saying there will be no relief for years to come. This is only going to mean one thing for Canada. There is going to be rising wage pressure to pay for these homes. I mean come on, even if you are a renter paying huge rental each month it’s only going to get higher. There is certainly not going to be any type of crash downward in prices! Not when there is shortages. Interest rates can’t go lower to accommodate higher prices so there is only one solution. Inflation will soar due to rising wage expectations.

Future Affordability

Even though Canada’s housing market is booming to many it feels like the country is in a perpetual housing crisis. Canadians, particularly those that don’t own a home, worry about skyrocketing prices, foreign ownership, supply chain issues, lack of inventory, numbered companies and corporations buying up what little inventory is available among a number of concerns.

There doesn’t appear to be any political or bank rate adjustments on the horizon to cool the pressure either. The government admittedly doesn’t have immediate answers. It will take “years” of work to tackle the challenges making Canada’s housing market so unaffordable, Finance Minister Chrystia Freeland warned on Tuesday.

Canada’s home values are one of the highest in the world and the overall market national assessment value hit $6.1 trillion in 2020, up 2.5% ($146.0 billion) from 2019. Canada’s nationwide housing is valued at over 300% of the country’s GDP. If we are comparing apples to American apple pie the USA’s is just 170% of its GDP. The majority of these valuations come from homes in Ontario and BC.

Toronto and Vancouver forecast 

“In addition to rising inflationary pressures, strong housing demand throughout the pandemic combined with limited supply has led to significantly higher house prices across the country. While those prices are expected to normalize “some” when the pandemic subsides, many of the “acute” challenges that are driving up housing prices will take time to address”. Time to address. So how much time is it going to take? Everyone want’s to know when housing is going to return to at least an affordable monthly price. Doesn’t look much like that is going to happen for a few years at least. Especially now that the genie of inflation has been released.

Canada has seen a record spike in home price appreciation during the COVID-19 pandemic, with national average home prices up 18 per cent in October compared with the same month in 2020, according to Canada Real Estate Association (CREA) data. “The price appreciation gap between condominiums and detached properties is narrowing. This trend will continue in 2022, as entry-level buyers are priced out of more expensive property segments, and the revival of the downtown core continues. 

Condos continue to appreciate

In the Greater Toronto Area, the aggregate price of a home in the fourth quarter of 2022 is forecast to increase 11.0 per cent year-over-year to $1,256,500. During the same period, the median price of a single-family detached property is expected to rise 10.0 per cent to $1,564,200, while the median price of a condominium is forecast to increase 12.0 per cent to $763,800. The GTA is the only major region expected to see price appreciation in the condominium segment surpass detached homes in 2022.

“Condos in the city of Toronto and in the greater region have rebounded with vigour, after taking a harder hit than any other major urban centre in the country at the onset of the pandemic,” said Cailey Heaps, who leads the Heaps Estrin Team, Royal LePage Real Estate Services Ltd

Montreal will see an 8.0% increase in aggregate prices

In the Greater Montreal Area, the aggregate price of a home in the fourth quarter of 2022 is forecast to increase 8.0 per cent year-over-year to $564,800. During the same period, the median price of a single-family detached property is expected to rise 9.0 per cent to $648,600, while the median price of a condominium is forecast to increase 6.5 per cent to $447,300.

Greater Vancouver region expects a 10.5% increase with single-detached reaching 12%

In Greater Vancouver, the aggregate price of a home in the fourth quarter of 2022 is forecast to increase 10.5 per cent year-over-year to $1,375,700. During the same period, the median price of a single-family detached property is expected to rise 12.0 per cent to $1,892,800, while the median price of a condominium is forecast to increase 8.0 per cent to $766,800.

“We’ve been experiencing a chronic shortage of housing supply for over a year, and inventory levels are steadily decreasing. This continues to be a main driver of price appreciation in Vancouver and the greater region,” said Randy Ryalls, managing broker, Royal LePage Sterling Realty. “Just about every listing receives multiple offers and ultimately sells above the asking price, many without conditions. This competitive environment makes it especially difficult for first-time buyers to transact.”

Ottawa housing market will see a 9.0% increase as demand for green space grows

In Ottawa, the aggregate price of a home in the fourth quarter of 2022 is forecast to increase 9.0 per cent year-over-year to $806,600. During the same period, the median price of a single-family detached property is expected to rise 9.0 per cent to $946,100, while the median price of a condominium is forecast to increase 6.0 per cent to $446,300.

“Demand is continuing to outpace supply in Ottawa and I believe it will remain strong in 2022, although the frenzied pace of the market is reducing in this final quarter of the year,” said Jason Ralph, broker and president, Royal LePage Team Realty

Canadian Government plans?

The Canadian government said it’s working with the provinces, territories and municipalities to “unlock and create” more housing supply.

“The government has invested over $70 billion through the National Housing Strategy that will support the construction of up to 125,000 affordable homes and increase Canada’s housing supply,” the fiscal update said.

“Addressing the issues of housing affordability is a priority for the government.”

Without any real concreate solutions to build affordable housing we can expect that 2022 will be another massive year for the real estate market. The accessible one anyway.