If you're looking to buy a place of your own sometime soon, average house prices in Canada are expected to soar well over $700,000 come 2022.
The Canadian Real Estate Association expects to see a massive rise in prices next year, driven by investor activity and solid demand from first-time buyers, with supply being at record lows. However, if you are buying an investment property, this imbalance between supply and demand in Canada's housing market could work well to your advantage.
Increasing Demand for Rental Inventory
Investing in Toronto real estate in 2022 will continue to make sense since Toronto’s mounting population will fuel the demand for rentals. Even though the pandemic somewhat slowed the demand for rental inventory for a period, with immigration expected to reach an all-time high and students returning to schools and colleges, we are already seeing an upsurge in rental demand.
The net migration data from the Conference Board of Canada shows that international immigration to Toronto will rise from about 103,000 people in 2021 to more than 120,000 in 2025, further exacerbating the demand. Canada aims to welcome 411,000 new permanent residents in 2022, breaking all immigration records to date. For the cherry on top, several high-profile tech companies are choosing to open offices in Toronto, further increasing the influx of skilled individuals to the city.
Moreover, many companies now are offering financial services for those who would like to have quick business funding to back their real estate businesses. If you are buying an investment property, Toronto’s record high rental rates mean that you will be able to pay down your mortgage by giving your property up for rent! If we are thinking of buying an investment property for some time, the iron is hot enough to strike!
Prices will Continue to Rise.
If you are thinking about investing in real estate in Toronto, the good news is that Toronto prices aren’t expected to drop dramatically anytime soon, but they won’t rise uncontrollably either! Even though the frenzied real estate activity has somewhat slowed since spring, so have the listings, which is driving the prices upward.
Ultra-low interest rates and robust demand driven by massive fiscal support continue to fuel the prices up. This holds especially true for condos since Toronto condos for sale prices have grown markedly in the past five years, and the trend is expected to continue.
When you compare the average condo prices for the Q4 of the last few years, you can appreciate how buying an investment condo in 2022 would pay off in the long run! As a matter of fact, over the past ten years, Toronto residential real estate has on average seen a strong market annual appreciation of 8.3%.
Since the pace of immigration is expected to accelerate come 2022, real-estate prices will keep increasing. Not to mention, while the variable mortgage rates have remained low until now, fixed high-ratio mortgage rates are expected to rise to around 2%, up from lows of 1.4 percent earlier this year. So it would be a great decision to buy in the first quarter of 2022, instead of stalling.
Some cities see periods of high appreciation followed by periods of no appreciation. On the other hand, Toronto’s residential real estate is fueled by an actual need for housing.
Even with many condo projects in tow, Toronto is underdeveloped by 26,000 homes. Being the second-fastest-growing urban center in North America and Canada’s tech hub, Toronto has a thriving economy, which will continue to drive an influx of people. This shows how stable the Toronto residential real estate market is. Since housing supply will always be limited, you can expect a steady year-over-year appreciation on your property.