The Canadian housing market has been in news media headlines and it has been quite a topic of discussion for people, who continued to work in an office setting in the wake of the pandemic. Soon after the pandemic hit, many people anticipated a sharp decline in home prices in Canada, but no one managed to predict what actually happened to the market. In May 2020, regional real estate markets started to rebound. The rise in demand continued through the year 2021 that led to record-breaking surge in real estate prices, eventually making 2021 perhaps the hottest year for the Canadian real estate sector. So, what can you expect in 2022? Here are five Canadian real estate market trends to watch out for in 2022. Interest Rates Will Rise There are rumors circulating that interest rates will begin to rise in April 2020. This is going to be the first move by the Bank of Canada, after interest rate cuts in March 2020, in the wake of the pandemic and the resulting economic after effects. The economy began to bounce back as vaccines became available, allowing businesses to reopen and consumers to return. However, the risk still exists as the emergence of new variants, such as the most recent Omicron, may call for further public health and safety measures and result in lockdowns in some regions that could impact some specific sectors. Thankfully the Canadian housing market regained its upward trend after a sharp but transient decline at the beginning of the pandemic. High demand led to unprecedented price surge, with sales being hindered due to lack of supply. As interest rates are expected to begin to increase during the busiest period in the real estate market, i.e., in the spring season, smart buyers are perhaps looking now to secure great deals, since they know that they probably will not get any price break in the spring time. So, will higher interest rates help cool down the hot Canadian real estate market? The big six banks have estimated that the Bank of Canada will increase its rate by one 1% by the end of 2022. This means, it is tough to predict now how this will impact the market. However, in light of the present situation of demand and supply, a 1% surge is less likely to impact the prices and sales of houses significantly. Real Estate Prices Will Continue to Surge The 2022 Canadian Housing Market Outlook Report assessed 38 Canadian housing markets. The report found surging prices in all the 38 markets in 2021 and predicted further growth in 2022. Expert residential real estate brokers and agents predicted price surge, ranging from +2.5% in Calgary, Alberta to +20% in Muskoka, Ontario. Nationally, the average residential real estate price is expected to rise by 9.2%. Canadian Housing Market Will See Low Supply Housing affordability will experience a constant decline in Canada, and that was the prime focus for every party in the 2021 federal election. Ontario has become the starting point for housing unaffordability, hence it is expected that this will also be a point of contention in the provincial election to be held in June 2022. So, what’s to be blamed for the rising prices? Low supply! According to real sector experts, the abruptly rising price of houses is because of the shortage in housing supply, which was further aggravated by a substantial surge in demand in the years 2020 and 2021. It is anticipated that this trend will continue as around 1.2 million individuals are expected to enter Canada by 2023 with all of them expected to require homes. As it has largely been predicted that there would be no significant growth in new construction or New listings in Burlington and other parts of the country, market pressure could enhance, which will put even greater pressure on home prices. While view may differ on how to effectively boost market supply, some experts have suggested a handful of potential solutions: A National Housing Strategy must be planned out and executed to enhance supply, involving a collaboration between the provincial, municipal, and federal governments. Incentivizing real estate developers to create cheaper, family-sized homes at strategic locations, close to transport hubs. This may include tax exemptions, cutting through the restrictive red tape, and smoothing out the application and approval processes. Encouraging homeowners to move while easing the fiscal burden related to selling a property, by offering tax exemptions and reconsidering two land transfer taxes in Toronto. This will likely help boost the supply of new homes in Oakville and other parts of GTA. The federal and provincial governments should collaborate to boost local economies in order to attract new residents. Presently, Canada has many “affordable” cities, but without the appeal of large urban centers. Therefore, shifting the focus from cities like Vancouver and Toronto may help ease the market pressure and reduce property prices. Sellers’ Market Will Dominate the Canadian Real Estate Scene In the end of 2021, it was expected that 97% of Canadian housing markets in 2022 will be seller’s markets, characterized by high demand, low supply, and rising property rates. This will probably continue in 2022, considering that boosting supply will not fix the situation immediately. Virtual Reality Will Be the Future of Real Estate Transactions Virtual home-viewing, selling or buying wasn’t just a trend of the pandemic-induced lockdowns. To be true, consumers have realized the convenience it offers and hence, they are less likely to give it up even after the pandemic ends. As top real estate websites are bringing new listings in Burlington directly to customer’s smart devices and virtual property tours are offering a chance to buyers to view properties in the comfort of their home — coupled with the ease of digital paperwork — it is safe to say that the virtual trend will gain more popularity with both sellers and buyers in the coming months. Roland Hack I am a full-time Real Estate Broker who specializes in coordinating BOTH the Selling and Purchasing of a Seller’s home.