Real Estate Market January, 2022

“STRONGEST REAL ESTATE MARKET EVER!”

“It was the best of times, it was the worst of times”.   Dickens’ immortal phrase might have been written for the turbulent, tumultuous Real Estate Market that we have experienced over the past couple of years!

Let’s begin with prices.   Average house prices, across all housing types in the GVRD, is up 17.3%, year over year.   That’s pretty good, but it doesn’t really tell the story of the pandemic inspired flight from the urban core to the suburbs.   Take a look at the distribution of price increases in select regions in the GVRD: (click on a neighbourhood and you’ll see the full statistics for it)

The results of several demographic trends are visible here:

1. Flight to the Suburbs.  Record numbers of former urban dwellers fled to suburbs, to detached properties if they could afford them or to townhouses if they couldn’t.   The result has been a levelling of prices across the city, where the disparity between prices in the city and the suburbs has shrunk.
2. Desire to Own.  Record numbers of new home buyers have flooded the market, driven by FOMO – the Fear of Missing Out and being priced out of the Real Estate Market.
3. Real Estate as an Investment. The Bank of Canada now estimates that 44% of all new construction in the Lower Mainland is purchased for investment purposes – and 28% of all housing stock which comes up for sale.

Incredible though these gains appear, they pale compared to the Real Estate Market in the rest of Canada… with Moncton’s average price gaining over 60%  in a year (the highest in Canada) and both Nova Scotia and Kitchener-Waterloo board averages exceeding 50%!

So what does 2022 hold in store?

1. Far more demand than supply.  The chart below tells the story … pre-pandemic, there was only 0.4 buyers for each seller – but post-pandemic, there are 1.5 buyers for each seller, creating massive upward pressure on prices.  This is expected to be the case through at least the first half of 2022.
2. Rising interest rates.   The Bank of Canada is expected to raise interest rates multiple times in the coming months to combat inflation, by up to 1.25%.   However, because of the way the stress test is designed, this is not expected to significantly impact buyers’ ability to qualify (yet).

The forecast for Real Estate Market 2022 is more prone to error than at any time in recent history because of the range of possible government actions – returning to work rather than working from home, interest rates, changes in home buying and selling rules… and the list goes on.   So take any forecasts with a healthy grain of salt!   For what it’s worth, here’s what the Real Estate Board of Greater Vancouver economists forecast:

Check our other blogs under Market Trends – that might give you answers about buying or selling a home.

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