After two years of unbelievable growth in the Canadian real estate market, the housing industry is encountering a change. Perhaps it is a path to normalization, or maybe it is a sharp correction. Whatever the case may be, it is unlikely that Canada’s housing market will continue the meteoric growth it has enjoyed since the early days of the coronavirus pandemic.
Indeed, many trends are forming in Canada: interest rates are rising, mortgage rates are going up, sales activity is slowing down, prices remain high, and supplies fail to meet strong demand. Because of this, many market participants – buyers and sellers – have questions. As a result, they are turning to Google to have their questions answered. But what exactly are they asking about anyway?
Here are some of the most popular queries that Canadians have about one of the world’s hottest real estate markets:
5 Most Googled Questions About Canada’s Housing Market
#1 What is Going on with Canada’s Housing Market?
The Canadian housing market is starting to slow down. Average selling prices have decreased and the market is expected to continue to cool down, with average prices continuing to decrease.
According to the Canadian Real Estate Association (CREA), the volume of homes sold in June 2022 was down by 23.9 per cent compared to the same period a year ago. This trend has been occurring since February, and is indicative of the market’s direction in the coming months because spring and summer are typically a strong month for home sales. Therefore, home sales are projected to return to their pre-crisis levels finally.
#2 What is Affecting Housing Prices in Canada at This Point?
Housing prices in Canada are affected by lending rates as this rate can make mortgages more expensive for buyers and impact homebuyers’ purchasing power. Higher mortgage rates are dragging prices lower.
The market saw significant affordability deterioration during the pandemic, and many investors and end-users piled into the housing market as it advanced. But now, as sales and prices trend downward, buyers are being forced to accept lower offers. Many people now want to dispose of their properties as the change in interest rates makes it unaffordable for them to continue carrying the properties they have already purchased.
#3 When Will the Housing Bubble Burst in Canada?
The rapid pace of the market over the last two years has made talk of the Canadian housing bubble front and centre. Also, interest rates during that time were at historic lows, allowing Canadians to take on enormous levels of debt that climbed to record highs, thus making them more vulnerable to economic downturns. Now, the housing market is slowing and some forecasters are alluding to the idea that home prices will moderate further in 2023 and 2024.
However, any bubble chatter is purely based on the present market trends. Furthermore, low supply levels and high demand are working against the idea that the Canadian housing bubble will burst.
#4 What Needs to Change to Make Housing More Affordable in Canada?
There is a need for governments to put in resources, build and maintain social housing. During the last two years, the housing market made it impossible for many families with limited incomes to afford rent, let alone buy. People need to earn wages that align with the growing annual inflation rate and market dynamics. The housing market is not equipped to provide affordable housing for low-income families. This can only change if the governments step in.
In addition, many people bought properties that were affordable for them during the pandemic because of low interest rates. However, since borrowing costs are swelling, recent homeowners may not be able to sustain their ownership once their mortgage renewals are due.
#5 What Canadian Housing Market Trends Should One Watch Out for in 2022?
Once again, interest rates will likely continue to rise, which was expected after a series of drops during the pandemic. Now that the economy is bouncing back and slowly recovering from the economic impact of the last two years, mortgage rates will climb amid the central bank’s inflation-busting tightening cycle.
Low supply in the Canadian housing market will continue to be a source of concern. Nearly 1.2 million people are expected to immigrate to Canada by 2024, and these people will need a home. Will the housing market be able to match this demand? Industry experts are doubtful.
Looking Beyond 2022
Market analysts and real estate agents are noticing that the real estate market is slowing down, whether in the major urban centres or rural communities. As a result, the Bank of Canada (BoC) has signalled that it will accelerate rate hikes to combat soaring price inflation. But the concern is that the economy will slip into a recession, potentially impacting the real estate market in the process.
Source: https://blog.remax.ca/5-most-googled-questions-about-canadas-housing-market/
