According to the report, housing market activity in 2022 is expected to moderate relative to record levels of activity in 2021, while remaining stronger than historical levels.
“Despite challenges with COVID-19, we are starting to see a turnaround in our job and migration numbers, and while interest rates are expected to rise, they remain relatively low. All these factors are expected to support strong housing demand into 2022,” said CREB® Chief Economist Ann-Marie Lurie.
“The biggest question will be whether supply can meet that demand. It will take time for housing to move out of sellers’ market conditions, so we do anticipate prices will continue to rise this year.”
Rising lending rates are expected to cool some of the demand later this year, but rates are still exceptionally low, supporting strong housing sales, especially from those who experienced increased savings and equity gains throughout the pandemic. Lurie says economic improvements are also expected to support both job and population growth, adding new sources of demand for housing.
“Despite challenges with COVID-19, we are starting to see a turnaround in our job and migration numbers, and while interest rates are expected to rise, they remain relatively low. All these factors are expected to support strong housing demand into 2022.” – CREB® Chief Economist Ann-Marie Lurie.
During the pandemic, supply has been a struggle for many industries, including the housing market. New listings have improved, but Lurie says it has not been enough to offset high sales levels, keeping inventories relatively low and likely limiting sales growth in the market.
As we move through 2022, Lurie says new listings in the resale market should remain relatively strong thanks to higher home prices. At the same time, the new-home sector recorded a surge in starts last year, and the completion of those starts should help add to overall supply choice in the market.
Supply levels are expected to improve relative to demand this year, according to the report. However, conditions are expected to remain relatively tight throughout the spring market, supporting further price gains.
As the market balance gradually improves, Lurie says upward price pressure in the housing market should ease. Overall, price growth is expected to ease to four per cent in 2022.
“While conditions in the housing market are expected to remain strong, there is a significant amount of uncertainty that could impact housing,” said Lurie.
“If supply levels remain low relative to demand, we could see stronger-than-expected price growth. On the other hand, if rates rise much faster and higher than expected, it could cause a more significant pullback in sales.”