Are we Starting to See the Housing Market Balance Off?

By: Sylvia Smith

Are we Starting to See the Housing Market Balance Off?



Are we finally seeing the real estate market balancing off?  We kicked off 2022 with historically low listing inventory that resulted in increased pressure on sale prices.  Low listing inventory continued right through mid-February but in the last 2 weeks of February, we finally started to see an increase in new listings coming on the market.

 Greater Toronto Area (GTA) February Market Update

 We kicked off February with a historically low inventory of residential property for sale but demand remained at record high levels which resulted in continued pressure on residential sale prices and most properties continued to sell in bidding wars.   Due to the low inventory of property for sale, February sales were down by 16.8% compared to February 2021.  But February 2022 was the second-best February on record after February 2021.  Due to the lower supply of new listings and the high demand continued to place pressure on sale prices and we had a 27.7% increase in average sale price compared to February 2021. As a result, the average sale price for all residential properties was $1,334,544.

The pace of price growth varied by home type in the Greater Toronto Area region but there was no significant variance in price increases between low-rise homes and condominium apartments.  We have definitely experienced the re-bound of the condominium apartment market across the GTA.  Condominiums are now often selling in bidding wars.  The suburbs continue to see higher price appreciation than the City of Toronto but the percentage differential is starting to drop as we move to a more normal routine after COVID and businesses start to encourage employees back into the workplace.
We did however start to notice a notable increase in new listings starting in mid-February which resulted in a slight reduction in the number of properties that sold in bidding wars in the last two weeks of February.  Is the shift a result of increased interest rates or the uncertainty with what is happening in Ukraine?  A little too early to know?

What to Expect in the 2022 Housing Market

The Bank of Canada has recently announced an increase of 0.25% increase in the overnight bank rate which will result in mortgage interest rates increases as well.  Given the out-of-control inflation rate, the Bank of Canada will most likely continue to increase interest rates for the balance of the year.  However, will these increases have a dramatic impact on the housing market?  My opinion is that projected rate increases will not significantly impact the real estate market as interest rates will continue to be at record low rates.   We are however seeing the first signs of the market moderating a bit with the page of sales dipping more than new listings.
We are projected to see an additional 432,000 immigrants coming to Canada in 2022 which will continue to place pressure on demand for housing.  I project that we will continue to remain in a seller’s market but a more balanced seller’s market and we will most likely see a more moderate pace of price appreciation.
2022 will continue to be a great time to sell. Are you curious what your home or property may be worth in our current hot real estate market?  You may be pleasantly surprised!   Reach out and it would be my pleasure to answer any of your questions or prepare a market analysis to provide you with a sense of what your home may be worth in this hot seller’s market.