The Toronto Regional Real Estate Board has issued its Outlook for 2022, The Post Pandemic Future: Communities, Housing & Employment. Though this is by no means comprehensive, let me take the opportunity to point out and comment on some of the highlights that stood out to me.
1. Demand for Home Ownership will remain strong. There’s little doubt here. We are coming off a record-setting sales year despite a global pandemic and a severe housing shortage. Nothing has changed in the past month to suggest buyers have had a change of heart. If anything, they are more determined to purchase before projected interest hikes, as illustrated by shortening sales cycle and rising prices. Look at the January numbers…for the entire GTA, the average sale was 13% above the list price. That is not for an isolated pocket or a specific product type…that is for the entire MLS!
2. Realtors will record 110,000 sales. If this prediction comes true, that would make 2022 the third highest sales total on record. Certainly, the demand is there. Plus, immigration patterns are normalizing and there is optimism around the labour market. That said, I am seriously concerned about rising prices taking first-time buyers out of the market, and, of course, there is virtually no inventory. At month’s end, we were at about three week’s supply. Without a major increase in new listings, this figure seems ambitious. However, if you include exclusive (off-market) listings and builder sales, neither of which are reflected in MLS figures, we will clear that easily. I cannot stress this enough: be sure to speak with a member of our sales team to learn about these ‘access-only’ purchasing opportunities.
3. The average selling price for all home types combined will reach $1,225,000. As a comparison, this figure was approximately $1,095,000 in 2021. So, while a 12% bump in average selling price seems aggressive, the truth is that we’re already there. For January 2022, the average sales price for all MLS listings was $1,242,793. To trend downwards for the rest of the year, we’d need to see: (i) a major bump in the share of condominium apartments in the sales mix. This is unlikely when they are already hitting 35% of the January mix (as a reference, condos comprised less than 30% of total sales in 2021); and (ii) reduced demand for luxury residences. Luxury markets are very strong right now. Just looking at Q4 2021, there was a 52% year-over-year increase in the sale of homes over $3 million and a 105% increase in the sale of homes over $5 million. So, with all due respect to TRREB, considering the huge demand for homes and tight supply, I think prices are going to go a lot higher in 2022.
If you’d like a copy of TRREB’s 2022 Outlook, please contact a member of our sales team. We will be happy to review the information with you.