Market Thoughts

2022 REAL ESTATE MARKET

I hope you’re staying well and enjoying the first open Summer season post-Covid.

As I enter my 18th year in real estate, my top question definitely is, “How’s the market?” so I’m writing to share my own thoughts on what’s happening, currently happening and will happen.

What happened, with the COVID-19 situation it put a lot of demand on housing, cars, consumer goods with not enough supply driving up prices. Aftermath of that is the 3 months of appreciation in real estate was erased from 1st to 2nd Qtr, 2022.

What’s happening now, the Bank of Canada & Federal government implemented interest rate increases to quell the demand, as there is too much money chasing too little supply. There is a lot of talk about recession, as the U.S. is now in a ‘technical recession’ (2 consecutive quarters of GDP contraction) but I think, much the U.S. recession during the 2007/08 bailout, Canada’s economic resiliency will fare better.

What will happen, rates will rise another .50 bps (previously BoC projected .75 bps) in September, 2022 the economy will continue to deflate prices and growth for the rest of 2022. Consumers will adjust their spending to reflect their budget. As with previous economic slowdowns they have lasted 6 months to 24 months to recover. Real estate prices will continue to fall making for a good buying opportunity especially in investor held units as prices are down and rental rates are high (over 20+% Year over Year).

I don’t think the BoC will increase interest rates as aggressively in 2023 as it has done in 2022. The real estate recovery will start in the 2nd Qtr of 2023.

Here are some stats: