With 2022 just around the corner, it’s a timely moment to start thinking about where the real estate industry is headed and how it will impact your home ownership and investments. Now that businesses have gradually started opening up again and cities across the globe are finally going back into some form of normalcy, a well informed outlook after an unexpected real estate boom in 2021 may have a large impact on your future decision making.
Toronto has long been considered to be one of the more expensive cities in which to live in Canada. As such, the Canadian government has placed numerous initiatives for first time home buyers as well as tax credits to make it easier for those trying to enter the real estate market.
“2021 was definitely a seller’s market with low overall inventory and very high demand, creating outrageous multiple offer scenarios and higher competition,” said Saghl Elahi, Sales Director for Palace Row, a luxury real estate team in Toronto.
With inventory being at an all time low, builders have been taking advantage of the market and purchasing properties to build future homes. Will 2022 reflect the same market dynamics, or will the market become more favourable towards buyers?
We had the chance to speak with Saghi Elahi from Palace Row, Navid Rashid, Sales Representative of Toronto’s fastest growing real estate company Ferrow Real Estate Inc., and Dayle Carmody, Sales Director of an established pre-construction sales team in Toronto, The Condo Company, to learn more about where the real estate market is headed in 2022.
What trend is the market likely to follow in 2022?
Carmody: We’ve watched a large gap develop between the towns and detached homes from the price of condos. Typically you would see a 10% gap, now it is showing roughly a 30% gap from condo prices. That means there is definitely room for condo prices to catch up to freehold prices because of the demand for lower priced housing (condos being the most affordable option.)
What is likely to be the trend in 2022 for first time home buyers acquiring a home or existing home owners moving into a higher price bracket?
Carmody: Turn key is more desirable. Buyers are nervous about the changing and rising cost of materials, labour, and shortages. I think you will expect to continue to see homes that are in good condition, sell first and faster as we typically see consumers run towards the path of least resistance.
Elahi: Due to the influx of experienced home buyers moving into larger homes/lots in the suburbs, it has actually allowed first time home buyers to enter the market in more previously desirable areas, such as the downtown core.
Rashid: I believe we will also continue to see parents using portions of their home equity to help their children buy homes.
Various government agencies keep talking about housing affordability. Do you have any thoughts on how they are addressing affordability?
Carmody: I think the housing crisis is something that must be tackled from every angle. It is an economic issue and an inflation issue. It is a minimum wage issue, and a banking issue… Even an education issue (not educating our population on wealth, home ownership and taxes). Canadian real estate is in high demand and has historically been a very good investment, as it will continue to be, even with the immense amount of inflation we can expect to see over the next 5-10 years.
Elahi: The City of Toronto has announced a new program where new condominium developments in the city will include 5-10% affordable housing. Ontario is also now proposing a housing affordability task force to make housing affordable.
Rashid: One of the ways government agencies have decided to solve housing affordability is to mandate affordable housing into new developments. The problem with this is that development hard costs wont change. With this mandate hurting profit margins, we will most probably see a resulting increase in price to balance the difference, which may even be passed on to the buyers.
What areas in the GTA do you predict people will be moving into, and why?
Carmody: East of Markham- North Pickering, Oshawa Ajax, along the lake toward Kingston. Prince Edward County, Oro-Medonte (between Barrie, Orillia and Georgian Bay), Towards Milton, Georgetown, West of Niagara along the border.
Elahi: After experiencing COVID, we have already seen more and more people leave the downtown core in the pursuit of more space and specifically: land. This has been the case whether it is a townhome, semi detached or fully detached home.
Rashid: I think when we look at the GTA as a whole, we look at public transportation, highways and location. With an incredible entertainment district coming to Pickering, over 90,000 residents are expected to move to each of the Markham and Durham regions over the next 10 years. Employment and housing will definitely continue to rise in demand on the east end of the GTA.