Well, here we are again. Right back where we were last year. Provinces across the country have reintroduced restrictions that will no doubt leave a lasting impact on our economy. The housing market of course is no exception.
In my estimation, there will be quite a few similarities between our current situation and the one we faced last winter. However, there are some ways in which this lockdown could prove slightly different.
What’s the Same
Just like last year, we’re all stuck at home. Nowhere to go, no one to see, and nothing to spend money on. Combined with government subsidies kicking back in, many Canadians could start stockpiling cash again. Cash that can then be used to improve their living situation.
This could mean putting a downpayment on somewhere with a little more space. Renovating or redecorating. Buying a cottage outside of the city. If you can’t leave your home, why wouldn’t you want to make it somewhere you love being? Savings are at all time highs and interest rates are still at record lows, so it makes sense that homeowners would take the opportunity to level up.
While interest rates were at rock bottom for most of the pandemic, 2022 will likely see them increase slightly. Forecasts have predicted that the Bank of Canada will raise their benchmark rate by 1%, which will impact variable rates slightly. Fixed rates have already started rising, although they’ve since fallen a touch.
None of this is surprising. Rates this low only have one way to go. Luckily, in the grand scheme of things, money is still ridiculously cheap to borrow – just not the cheapest it’s ever been. Rising interest rates are unlikely to impact the market negatively, especially given the tight housing inventory that doesn’t appear to be loosening up any time soon.
In fact, the CREA is predicting that house prices will go up by 7%. Some analysts have even thrown out numbers closer to 15%! There are a lot of forecasts circulating right now – but none that I’ve seen come close to zero, never mind below it.
The Bottom Line
In so many ways, Canada is going in circles. But when it comes to our housing market, we’re only going one way – and that way is up. Even in the face of inflation and higher interest rates, there are still a lot of reasons to be confident in our housing market. Waiting and timing it out is never a good strategy, and that’s especially true right now. As the old saying goes:
“The best time to buy was yesterday. The next best time is today.”
Your best interest is my only interest. I reply to all questions and I welcome your comments. Like this article? Share with a friend.
Steve Garganis: 416-224-0114; firstname.lastname@example.org