Home sales will slow down next year, but prices are unlikely to drop anytime soon, the Canadian Real Estate Association (CREA) said on Wednesday.
In its forecast for 2022, released on Wednesday, ACI says it expects tighter supply conditions to push housing costs even higher in 2022.
“While we do not foresee such a marked increase in prices in 2022, many of the conditions which made them so much rise until the end of 2021 will still be present on New Year’s Day,” said the association in a statement.
The ACI forecast indicates that the overheating conditions that have plagued the country for years and have been exacerbated by the COVID-19 pandemic will not fully abate anytime soon.
While interest rates and mortgage rates are expected to rise and moderate some market activity, forecasts suggest that the appetite for home ownership will remain strong and that the lack of available properties will cause people to move away from home. ‘will not get much cost reduction.
In November alone, the MLS Home Price Index rose 2.7% month over month to hit a record high 25.3% year over year.
The ACI forecast that the national average home price would have increased 21.2% on an annual basis to reach $ 687,500 by the end of this year.
This is higher than in its previous forecast and the ACI has clarified that this reflects the unprecedented imbalance of housing supply and demand, which results in the country having around two months of inventory while the long-term average is five months.
With supply continuing to hit new lows every day, ACI predicts that the national average home price will rise 7.6% on an annual basis to reach about $ 739,500 in 2022.
She warned her forecast was “conservative,” as the national average price was nearly $ 721,000 in November 2021.
The association believes the highest prices will be seen in British Columbia and Ontario, where it anticipates average prices of $ 990,038 and $ 971,080 respectively.
Rather, the lowest average prices will be found in New Brunswick and Newfoundland, where they are expected to reach $ 275,190 and $ 286,341 respectively.
The ACI expects sales to remain “historically strong”, but to move further towards usual levels due to declines in all markets except New Brunswick.
“Limited supply, high prices and high interest rates are expected to decrease business in 2022 compared to 2021, but boiling resale markets resulting from disruption caused by COVID-19 is expected to drive business beyond normal levels before the pandemic, ”the ACI observed in its forecast.
“This downward trend is expected to manifest across Canada as buyers contend with higher prices and lower supply; at the same time, the urgency to buy a home to wait for the end of the pandemic continues to fade. ”
She predicts that national home sales will fall 8.6% in 2022 to about 610,700, which would make it the second-highest year on record for sales.
Sales increase in November
In addition to its forecast for 2022, the ACI released its data for the sales of residential properties in the country during the month of November on Wednesday.
Seasonally adjusted sales climbed 0.6% to 54,222 in November, from 53,915 in October, a month in which they recorded a 9.0% increase.
On an unadjusted basis, sales were 49,272, down 0.7% from the previous year.
Sales grew on a monthly basis in about three-quarters of local markets and all major cities.
The national average price was $ 720,850 in November, up 19.6% from $ 692,565 last year.
On a seasonally adjusted basis, the national average home price was $ 719,102, up 1.4% from $ 709,147 in October.
Excluding the greater Vancouver and GTA, two of the country’s busiest and most expensive markets, the national average price drops by $ 158,000, ACI said.