As we approach the end of December, it is inevitable that all the speculations, and allegations about the 2022 housing market will begin to emerge.
In the past, many have hoped for a crash in order to cool down the hot housing market, but unfortunately one isn’t quite around the corner. Despite a slowdown in Canada’s double-digit house price inflation next year, affordability will deteriorate in the world’s hottest property market.
The final quarter will likely see a housing price boom due to a rush to buy homes before interest rates rise next year. The Bank of Canada recently warned that there was a higher risk of a correction in the market due to the froth in the market caused by investors fueling perceptions that prices would rise indefinitely. According to Rishi Sondhi, economist at TD Economics, home price inflation will slow considerably next year, making affordability unlikely to improve.
It is unlikely that one or two rate increases would have a significant effect, but four or more increases in 2022 should take some demand out of the market, especially from interest-rate-sensitive investors. Prices have climbed beyond the reach of many first-time home buyers and a supply shortage of housing units has only made matters worse.
So as we begin the countdown to 2022 it is important to consider all of these stats, and points of view and ideas, this shows what could essentially be coming our way as agents, and the people who help clients sell their home, or buy their new property. Issues will continue to arise, and in a short supply market, tension will continue to grow which will only make buyer’s stray away, and sellers fleeing.