If you’re thinking about buying a home, you’re not alone. The ongoing pandemic has led many aspiring homeowners to daydream about having a space that better meets their needs, whether that’s a house with a yard or a truly spacious condo. Of course, in a market that’s constantly breaking records, that goal can feel impossible.
Now that a new year has begun, many would-be buyers are wondering whether conditions will improve in 2022. Will this be the year when you can secure the perfect place, or is it likely to bring more of the same?
If you’re wondering whether homeownership is in reach in 2022, here’s what you should know…
A look at demand and prices
There continues to be a housing shortage, and demand is outpacing supply. While some buyers will be priced out of the market in the year ahead, others will be motivated by the desire to ride out the pandemic in their own space. All in all, it’s bound to make for a competitive environment.
Despite the competition, the Canadian Real Estate Association (CREA) predicts that sales were dropping by 8.6 per cent in 2021. Of course, perspective is important. It’s still going to be the second-highest year on record for sales. CREA also expects that in terms of price, the Ontario average will reach $971,080.
So, while competition will remain strong and prices may be out of reach for many, 2022 may signal a slight improvement in conditions for buyers. Growth may level off even more in 2023, when the market is expected to become more balanced.
If you want to buy sooner rather than later, there is some good news. Home hunters who are searching in and around the GTA can still find greater affordability in towns and cities outside of Toronto without sacrificing on quality of life. Places like Kitchener and Waterloo are well worth exploring, and you’ll even find lower price points in Guelph (though the city did recently join the real estate million dollar club).
Interest rates will riseIt’s not what prospective home buyers want to hear, but (unfortunately) it’s true. The Bank of Canada will almost certainly to enact multiple rate hikes in 2022. We all know what that means—mortgage payments will become more difficult to afford, especially for those on tighter budgets.
For this reason, it’s important that buyers protect themselves. If you’re thinking of opting for a variable-rate mortgage, make sure you have a firm understanding of whether you can comfortably afford to do so. There’s currently a rate hike expected for the Bank of Canada’s next meeting on March 2, and several more should take effect throughout the year. Being ready for these changes is the key to buying without stress.
If you’re not sure whether buying a home in the face of upcoming interest rate increases is prudent, consider talking to a qualified financial advisor about your circumstances.
If you’re interested in learning more about buying a home, we can help! See some of our helpful resources for buyers below.
There’s some relief in sightIf you’re determined to buy in the not-too-distant future, there are some reasons to optimism. Real estate continues to be a great long-term investment, especially in thriving communities that offer reasonable affordability (Kitchener and Waterloo immediately spring to mind).
Essentially, you have two options: purchase now and begin your homeownership journey as soon as possible, or hold off until the market cools a little bit. If you opt for the former, you’ll need plenty of money in the bank and the will to compete. An experienced agent who knows the local market can help you take the next step with as little risk as possible.
If you choose to wait, you may be able to take advantage of a more balanced market. A local construction boom is set to provide more inventory, while interest rates will likely have a cooling effect overall. As a result, upward pressure on prices should gradually decrease.
If you’re not sure whether to buy a home in 2022, talking to us can help. We’re happy to assist you in better understanding current conditions—and making the decision that’s right for you!