Year in Review
I swear these “Year in Review”s get stranger every year. I didn’t think 2020 could be topped for weirdness but then 2021 came and, I’ll be honest, I have absolutely no idea what is in store for 2022.
But, first, let’s take a quick look back at 2021. The spring market came in January and didn’t end until about June. The summer was busy but things chilled out (relatively) a bit and then the madness took back over in the Fall and here we sit in late December 2021 and things are absolutely wild.
Record numbers of sales and prices were hit, the condo market made its expected return, rents are creeping back up…
Omicron is here and shutdowns are on the horizon but will that light even more of a fire in the market or cool it? Interest rates are creeping up but the Bank of Canada hasn’t pulled the trigger on increases just yet. Will they to help cool the market? There’s definitely FOMO in the air but everyone is unsure when and how this will end. It’s the most difficult prediction I’ve had to make in the last 10 years.
So, How Did We End 2021?
- Prices Are INCREASING…across all segments
In 2020 the freehold segment drove practically all of the increases but now all segments are contributing almost evenly across the board. Everyone is buying up what they can afford while interest rates are low. The FOMO is brewing…
- Sales Are UP, Listings are DOWN
Record number of sales and extremely low inventory have characterized 2021 and that hasn’t changed as we head towards 2022. With more shutdowns to come it’s hard to see how that changes if things remain the same.
- Average Days on Market are DOWN & Inventory is DOWN
The months of inventory hit a staggering 0.8 months in December. That means that if no new listings were added to the market all existing inventory would be sold in a little over 3 weeks.
3 Predictions for the 2022 Mississauga Real Estate Market
1) Prices will go up again…
I’ve seen this before. High demand, low supply coupled with low rates…prices are going up. The question becomes by how much and for how long?
January is going to start off very, very hot. Once the Bank of Canada signifies that rates are going to increase I think we’ll naturally see a cooling point but it will depend on how much rates will rise and how quickly this next wave of Covid can subside and how quickly the world can open up.
Is there a return to work pushing people to sell off in the burbs? Is enough immigration coming to sustain the levels of demand that would drop off due to increased rates?
2) Interest rates will move up…but no one knows by how much.
This year interest rates will rise. It’s not a matter of if but when. You’ve already seen fixed rates move up in the Fall. The Bank of Canada is signalling that inflation may not be temporary. The current estimate by the major banks is 5 hikes at 0.25% for a total of 1.25% by year end. If that’s the case, that should help cool the market and bring back some stability. However, until that happens we’ll likely see a rush of pre-approved buyers/sellers trying to trade before rates move up.
3) A peak will be hit at some point in 2022
Right now I’m getting the feeling I had in 2017. That something has to give. The Bank of Canada is warning that rates will go up but until they actually do, buyers and sellers are going to continue to buy and sell in today’s climate…which is red hot. We saw the after-effects in 2017 of very balanced markets returning in 2018-19 and at some point the same has to happen again. Let’s hope we can find this “soft landing” everyone is hoping for.
The Wrap Up
2021 was once again the year of the bully/multiple offer with records sales and pricing and we’re still in the midst of that heading into 2022. Beyond that, it’s anyone’s guess what will happen and it seems like the forecast is entirely in the hands of the Bank of Canada. As always, my advice is don’t stretch your budget, buy what you can afford when you can afford it because as fun as these predictions are to make the truth is no one has any clue what will happen in the future.
Good luck hunting, selling or investing in 2022 and remember real estate is a long game…
Photo credit to – Christian Schnettelker – www.manoftaste.de