Real estate roundup: 5 big news stories trending this spring

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The Canadian real estate market has been experiencing a lot of change lately, leaving many would-be homebuyers, sellers, and investors uncertain about whether or not to make a move.

One of the best ways to quell that uncertainty—and make a more informed decision about moving—is to keep track of the latest real estate news. That's why we're recapping 5 of the top trending topics in the Canadian housing market below including:

  • The impact of recent Bank of Canada (BoC) interest rate increases
  • What a 'cooling market' means for buyers and sellers
  • Steps the federal government is taking to make homeownership more accessible
  • Changes in the condo market
  • A free AI-powered home value calculator

Knowing more about these hot topics can help you move with confidence in a dynamic market.

The Bank of Canada’s interest rate hikes are changing the real estate landscape

After more than two years of record-low rates, the Bank of Canada increased its interest rate from 0.5% to 1%. And they’re not done: two more rate hikes are expected on June 1st, and July 13th. What does that mean for home buyers and sellers? Here’s a breakdown:

House prices are expected to reach their peak this spring

According to the Royal Bank of Canada, house prices are up this spring, but the bank also predicts that the housing market will gradually cool over the fall and into 2023, bringing house prices down (by 2.2% in 2023) and slowing resale activity. 

While bidding wars may wage on in large urban centres like Vancouver and Toronto, the rest of Canada can expect to see slightly lower prices over the next year or so.

It may be harder to qualify for a fixed-rate mortgage right now

Although variable-rate mortgage holders have been enjoying low rates since 2020, their monthly mortgage costs have been going up lately. 

Why? Whenever the Bank of Canada increases its benchmark interest rate, their mortgage payments increase along with it. 

Still, if you’re looking for a long-term mortgage in the current market, a variable-rate may be the best way forward. That’s because the interest rate increase just made it harder to qualify for a fixed-rate mortgage. Find out why in our breakdown on fixed vs. variable mortgages here.

Now is a good time to assess your financial health (with the right tools and people)

If buying or moving is still part of your plan for 2022, you can make it happen by taking proactive steps:

A cooling market may be advantageous to buyers

As interest rates rise and housing prices fall, there may be an opportunity for homebuyers who’ve historically had a hard time entering the market to finally find a home. 

The Canadian Real Estate Association reported in April that the average price of a home dipped to $796,000 from $816,720 in March—a 3% drop.

That may seem like a small difference, but if the trend continues, which analysts are predicting, homebuyers who have been biding their time may find the right home at the right price—without the bidding wars they’ve come to expect. 

Will this next chapter bring about the end of the housing bubble in Canada? It’s hard to say for sure. But slower sales and lower prices will certainly change the buying and selling strategies of Canadians.

The Canadian government is attempting to make home ownership more affordable

The 2022 proposed Federal Budget aims to tackle affordability and the country’s housing shortage by stimulating construction/building, restricting foreign and domestic investment that drive up home prices, and adding new tax incentives for first-time homebuyers, among other initiatives. 

While it remains to be seen how effective these strategies will be as they roll out over the next year, it’s encouraging that officials recognize homebuyers and sellers as a priority.

Affordable housing is at the forefront of voters’ minds in the upcoming Ontario election, according to an Abacus poll. This issue beat out education, climate change, and transportation as the most important factor for Ontarians as they prepare to elect their next government. 

More than half of the people surveyed said they’re more likely to vote for a candidate who prioritizes affordable housing. And candidates have made it a point to put the issue in their platforms: Ontario’s NDP and Progressive Conservative parties pledged to build 1.5 million homes over the next 10 years. 

The Liberals followed suit when they released their platform. And the Green Party promises to implement a 20% tax on domestic buyers who own multiple properties, if elected. 

The condo market is booming in bigger Canadian cities

The Financial Post reports that the first quarter of 2022 saw plenty of homebuyers turning to (and investing in) upscale lodgings—specifically condos. 

The City of Toronto, Greater Toronto Area, Montreal, Vancouver, and Calgary all saw annual gains in condo sales over $1 million. According to experts interviewed by the Post, “consumer and investor confidence” in Canada’s urban markets is the reason for the surge, plus a dwindling supply of single-family homes. 

“While inventory was shrinking a year ago, it’s now increasing,” our Pricing expert, Arieh Dales, recently told us in a Q & A. “There still seems to be relatively strong [condo] demand. But, like you, we’ll have to wait to see if and how that’s impacted by future market changes.”

New AI-powered real estate technology reveals how home values changed during the pandemic

Over the past two years, the real estate market has been breaking all sorts of records. The impact of the pandemic on Canadian housing was felt across the country and led to bidding wars, soaring  prices, and record-fast home sales in some regions.

A new innovation in real estate technology is helping bring more clarity to what exactly happened by showing us how home values had changed over the course of the pandemic.

Instant Estimate, Canada’s most accurate free home value calculator, uses artificial intelligence to help homeowners determine the best time to sell. They can set their buying budget and track their net worth with the real-time valuation of what’s likely their biggest asset: their home. 

It’s also turning out to be a valuable research resource in understanding market changes over time. Instant Estimate recently helped power an insightful report on pandemic housing trends in the Vancouver and Fraser Valley regions.

Comparing the sale price of Vancouver homes bought in the last 6 months of 2020 to their 2022 Instant Estimate, the report found that the value of homes has risen by nearly 18%. In 2020, the median sale price of a Vancouver-area home was roughly $920,000, compared to today’s median Instant Estimate value of $1.4M.

What does this mean? According to the Instant Estimate report released last month: “In mid-2020, Vancouver residents were increasingly likely to trade in their downtown properties to embrace more space in the suburbs. But as the market rebounds and pandemic restrictions lift, many residents are now seeking closer ties to the city, driving up demand, and value, in the city core.”

Now more than ever, it’s important to use data-driven real estate technology like Instant Estimate to track the upward or downward trends in the value of your home, especially in light of the two planned consecutive interest rate hikes, Federal budget approval, and provincial elections expected this year. 

Curious about the value of your own home in the Toronto or Vancouver area? Use Properly’s Instant Estimate to get a real-time valuation: https://www.properly.ca/instant-estimate/

Want more perspectives on what’s happening in the real estate market?

Our blog offers a holistic look at all things buying and selling in Toronto and Vancouver. From how to upgrade your home for sale to calculating your home’s current value, we’re always analyzing how market changes affect home buyers and sellers, and updating our library to help you make the most informed real estate decisions this year, and beyond. 

Still have questions around how to proceed with the real estate market this year? Reach out to our team of experts - they’d be happy to talk it through with you.

*DISCLAIMER: This article is provided for informational purposes only. It is not an exhaustive review of this topic. The content is not financial or investment advice. No professional relationship of any kind is formed between you and Properly, Properly Brokerage, or Properly Homes. While we have obtained or compiled this information from sources we believe to be reliable, we cannot and do not guarantee its accuracy. We recommend that you consult a trusted professional before taking any action related to this information. Properly is a tech-enabled real estate brokerage that is transforming the home buying and selling experience with AI-powered home valuations and a modern streamlined service. We recommend that you compare and contrast your options, read the fine print, and conduct detailed research into any real estate, loan, and/or investment provider before using their services.*

Properly is a Canadian tech-enabled real estate brokerage transforming the home buying and selling experience as the only service in Canada that helps homeowners to buy before they sell.