THE ANTICIPATION KEEPS GROWING – WHAT’S STILL TO COME?

April 26, 2022

The Toronto real estate market has been the subject of breathless media coverage for months and years on end. The average price of sales has steadily risen, inventory levels are getting tighter, and the market has become almost impossible to penetrate for first-time buyers.

There is a lot of talk about how the affordability crisis and escalating prices are unsustainable. Historical low interest rates, coupled with the notorious stress test, are emboldening people to take on way more than they can handle and creating rampant speculation. There was no telling when or how the party would end. The reason and method were up for debate.

The market is clearly responding to the rise in interest rates. The holding pattern we have been in during much of the pandemic appears to be eased as buyers bow out and some upward pressure on prices and inventories dissipates.

Compared to two years ago, the prices have risen dramatically. Some of the same pundits who scoffed at supply as the only way to bring down prices are now bringing attention to interest rate hikes, inflation and economic uncertainty as signs that the end is near.

As we expected, these rates are now on the rise. This is why we performed the stress test in the first place. Despite the fact that rates are still well below pre-pandemic levels, we still have a lot of uncertainty on the ground.

Markets are having a moment as they prepare for what’s to come. I suspect that we are on the cusp of a real transition with prices softening and a slow summer ahead. Some markets will have a sharp correction and others will simply hover – some people will feel it harder than others.

 

 

 

 

 

Credit: Lackie