The real estate market isn't crashing. No matter what 'sensationalist' reporters say or write. And despite rising interest rates and some other signs that the market could be 'settling', Royal LePage has changed its forecast for 2022.
RLP had initially forecast 2022 Canadian home prices to go up by 10.5% but, driven by continued momentum in the Greater Toronto Area, the expectation now is for prices to rise 15% by Sept/Oct/Nov/Dec. The adjustment is being partially attributed to a record breaking 1st quarter, in which the average price of a Canadian home rose 25.1% year-over-year to $856,900.
In the GTA, the acceleration in prices was even greater as the average home price increased by 27.7% year-over-year to $1,269,900.
Royal LePage President/CEO, Phil Soper, said that while there are signs that some change could be afoot in the market, with the number of listings “increasingly slightly” in recent months, there is nothing to suggest that a correction is on the horizon. RLP, in fact, is still forecasting the average price of a home in the Greater Toronto Area to surpass $1.3 million by the end of 2022, which would equate to a 16.5% year-over-year increase.
“It's a complex thing, our economy. Some things make prices rise, other things push consumer confidence down and that's the kind of turmoil that Canadians are wrestling with right now,” Soper said. “In general things continue to look positive for housing as more people move to Canada. But people are being a little more cautious and certainly the rising interest rates have heightened people's awareness that the economy is in an unusual place.”
Real estate prices have surged during the COVID-19 pandemic and in the first quarter of 2022 the average price of a detached home in four Golden Horseshoe communities - Barrie, Cambridge, Kitchener-Waterloo and Oshawa – all surpassed $1 million, for the first time.
Soper continued that occasional “periods of irrational exuberance” in the real estate market do all “run their course”, eventually, and there are at least “early indicators” of a change in buyer mentality.
It remains to be seen, though, whether there will be any relief for first time buyers trying to get into the market. As the Bank of Canada is now in the midst of a rate hiking cycle, the cost of borrowing is increasing and so are monthly mortgage payments which affect what price point buyers can afford.
Demand for housing in Toronto and the surrounding region remains extremely strong. Even though there has been a slight increase in new listings in recent weeks, competition is still very tight among buyers ahead of further interest rate hikes. The condo market is still extremely competitive, as some people are returning to the city due to return-to-office mandates as well as first-time buyers look 'to own' at an affordable price point.
Royal LePage provided data on house prices in 62 different markets as part of its updated forecast.
Prices in Toronto were up 20.9% year-over-year in the first quarter of 2022, and that is actually below the national average.
Here are some of the average price increases in GTA communities between the first quarter of 2021 and the first quarter of 2022:
- Brampton – 30.5 per cent
- Mississauga – 26.1 per cent
- Hamilton – 32.4 per cent
- Oakville - 28.2 per cent
- Oshawa – 29.4 per cent
- Pickering – 25.4 per cent
- Vaughan - 26.3 per cent
- Whitby – 34.2 per cent
- Richmond Hill – 24.7 per cent
- Markham – 22 per cent
- Ajax - 32.2 per cent
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