Wondering how the Ontario real estate market will change as 2021 draws to a close, and we look toward 2022? To help you prepare for the future, the team at Morison Insurance put together the following report. In it, you'll find the most up-to-date information available on what you need to know, and a bonus tips section that goes over other considerations such as home insurance and home inspections. Keep reading to discover what the New Year has in store for buyers and sellers alike.
It's no secret that housing prices have soared across the country, and Ontario is no exception. Over the past few years, a number of factors have contributed to skyrocketing prices. Not including 2020, record levels of international immigration, low interest rates and millennials looking to buy homes have created a strong housing demand in Canada. Yet, as the past several years indicated, there was a comparatively low availability, meaning that a seller's market saw home prices going through the roof—so to speak.
When COVID-19 hit, the fallout of the pandemic supercharged these trends. Existing owners looked to communities away from large metropolitan areas to ride out the pandemic, and more and more first-time homeowners pulled the plug and set down roots. Suffice it to say, people across our populated province were urgently looking for a home that suited their needs and provided enough space—it's amazing how spending 24/7 at home can make one realize the benefit in being a homeowner.
This surge in first-time home buying activity combined with existing homeowners looking to move away from urban centres all served to drive real estate prices up even higher, while supply fell to all-time lows. As the latter half of 2021 saw the majority of the province getting vaccinated, that urgency has started to wane. It seems that the market is starting to settle down—however, we can't neglect to note that it's "settling down" from an unprecedented height.
As Ontario looks to reopen, and our lives and economies go back to the new normal, this means that migration and international immigration will once again come to the fore. This return to normalcy leaves a considerable amount of uncertainty when we look at Ontario real estate market trends moving forward.
As homes for sale are still at an all-time low, and the demand to buy is still high, the Canadian Real Estate Association (CREA) stipulates activity will remain strong throughout 2021—despite the slowdown that began in April, there has still been a record number of sales this year. Over time, the market is expected to cool slightly and return to more typical levels.
Subsequently, 2022 is expected to see a decrease in activity. However, this does not mean it will become a buyer's market any time soon. Rather, 2022 is expected to be the second-best year on record for sales—shying only in comparison to 2021's boom.
The Multiple Listing Service (MLS) Systems tracks home sales activity according to the majority of Canadian real estate boards and associations. Throughout the remainder of 2021, it's estimated that roughly 656,300 properties will trade hands via Canadian MLS Systems. This will be a record-setting result—illustrating a 18.8% increase over 2020.
Across the country, the CREA expects double-digit sales growth in nearly every province—except for Quebec.
According to the Canada Mortgage and Housing Corporation, in Southern Ontario, both Hamilton and Toronto are considered to be at high risk of a price correction. Particularly, Hamilton's housing market demonstrates overheating. Low mortgage rates have brought more first-time buyers into the market, making it easier for existing homeowners in Hamilton to sell and upgrade to a more expensive property. This has seen an increase in housing prices across the province.
Nationally, the average home price is forecasted to rise by 19.9% to just over $680,000 for the remainder of this year. This increase reflects the current unprecedented imbalance of housing supply and demand. While market conditions have eased recently, they still favour sellers across all local markets.
As 2021 draws to a close, sales are forecast to continue trending back towards more typical levels. This is a trend that will continue into 2022. Since there is such a limited supply of housing, and high prices continue to be the trend across the country, it's likely market activity will naturally slow down slightly in 2022—particularly for first-time home buyers.
However, resale markets may continue to be very active. It's not clear yet exactly the impact COVID-19 will have, and returning to the new normal may still mean homeowners are looking to find properties with more space, further away from urban centres, and that offer ample green space as mental health concerns have peaked during the pandemic. Not to mention, as more and more Canadians are working from home—and choosing to remain remote—it's changing the way we use our homes. Workers without access to a dedicated office space, for instance, are more likely to look for homes that can accommodate this changing need.
Indeed, it is possible that many of the moves associated with changes related to remote work won't play out until further down the road in 2022. At this time it's too early to say what the complete impacts of a post-COVID world will be.
National home prices are forecast to rise by 5.6% on an annual basis to around $718,000 in 2022. As buyers face likely higher prices and a lack of available housing in a highly competitive market, this will likely make it even more difficult for many buyers to purchase a home.
As housing prices continue to be on the rise for the remainder of 2021—and it looks like even a "cooling market" will still mean high prices and limited supply in 2022—it's helpful for prospective buyers in Ontario to know how to navigate a hot market. While sellers still have the edge, there are a few tips you can use to mitigate that edge as much as possible.
Before pulling up your sleeves and seriously looking for a new home, it's helpful to get a sense of exactly how hot the market is in your community. Walk through the neighbourhoods you're interested in and take note of how long homes are listed before they're sold. Likewise, scroll through your favourite real estate site for new listings and pay attention to what is selling and how fast. You can also look at recently sold listings online to see how much homes are going for compared to their initial listings.
This is a great way to learn more about your local market, without feeling the pressure of having to make an offer.
Having the right real estate professional in a seller's market is particularly important. You want someone who can alert you to new listings as soon as possible—even before the listing is made public. An established broker is likely the way to go, as he or she is more likely to know how to make your offer stand out.
Waiting for "the one" may not be an option in a hot housing market. Unfortunately, limited supply and high demand makes the market incredibly competitive, and so you should be conducting your home search with the mentality that you can make a "good enough" home work.
Think about what features and amenities are a must-have, and what you can be flexible on. It's also helpful to think about the home as your future self might see it. You may not need three bedrooms, but perhaps you could convert one to a home office until you decide to have a family later on down the road.
Being pre-approved for a mortgage can make all the difference when trying to close. Compare mortgage rates from several lenders, and get pre-approved by at least two of these lenders. This will help you compare costs and find the best solution for your needs.
When it comes to closing on the deal, being pre-approved illustrates to a seller that you're serious about buying—you're not "just looking." Illustrating you are creditworthy can also quicken the close, meaning it's less likely you'll lose the home to another buyer.
It's important that you can show a seller that you can definitely close the deal—especially when competing with cash offers. Not only does pre-approval give you an edge in this situation, but you may also want to consider making a larger down payment. The more trustworthy and committed you appear to a seller, the more likely you can close the deal efficiently.
In the current Canadian housing market, it can feel like a rat race just to get a home. While it may be tempting to skip certain contingencies, do not skip the home inspection. It's vitally important that you complete an inspection just in case there is a problem with the home where you might want to back out of the deal. An example of this could be mold, wood rot or serious structural damage. To put the seller at ease, you can note that the inspection is "informational only," and clarify that you will take on the responsibility for repairing minor issues after the sale.
There are a couple of ways you can "sweeten the pot," so to speak, when it comes to making your offer more enticing to sellers. We’ve outlined a few of these options below. However, keep in mind it’s still important to act on the advice of your realtor.
It can take a while to find the right home—even as much as three months. And once you do find that ideal residence, it's still possible you may be outbid. That's why it's very important to be as patient as possible. The right home, that you can afford, will come along. It's only a matter of time.
In particular, don't be tempted to bid more than you can afford to get a property. This could leave you “house poor” and regretting your decision to rush. There's no way any of us can control the real estate market, so it's best to be as prepared as possible for when the right home does come along. Although it's difficult, try not to get too emotionally attached to a certain place. In a hot market, this is a recipe for heartbreak.
Once you've secured your new home, the next step is ensuring you have the best insurance possible. At Morison Insurance, this is where we come in. Our family-owned, local business is here to help. One of our dedicated brokers will work with you to ensure you have the best coverage possible for your new home—so you can breathe easy knowing your greatest asset is protected.
To inquire about a quote today, we invite you to give us a call at 1-800-463-8074. You can also reach us online by filling out our contact form.
This content is written by our Morison Insurance team. All information posted is merely for educational and informational purposes. It is not intended as a substitute for professional advice. Should you decide to act upon any information in this article, you do so at your own risk. While the information on this website has been verified to the best of our abilities, we cannot guarantee that there are no mistakes or errors.