It’s no secret that Canada has had a shortage of  housing inventory over the last couple of years, in part due to the high levels of demand that accompany low-interest rates. In fact, 2021 was a record-breaking year concerning all-time lows in inventory. It was also, however, a record-breaking year concerning total home sales.

Because of the persistent low supply of homes coupled with strong demand to purchase said homes, housing prices continue to soar, with some regions of the country experiencing final selling prices sales of $100,000 up to $400,000 over listing price! 

The question then becomes whether or not this economic climate can sustain itself and at what point does it reach an implosion? While the answer is certainly a multifaceted one that deserves further examination, many experts are suggesting the second half of 2022 will likely see a noticeable cooling of the market. 

This presumption is, in part, due to the sequence of logic forecasting inventory levels to all but run out, housing prices to reach levels unsatisfactory and illogical for the consumer, and ultimately, consumer frustration that results in a drastic decrease in demand. 

Once the storm has passed, however, the hope of many who want to be homeowners is that we will see a re-uptick in inventory, a drop in prices, and a later balancing of supply and demand; this, of course, is the best-case scenario, though we can only predict what might happen…

The First Half of 2022 Will Remain Much the Same

Transitioning from ’21 into ‘22, the real estate landscape is set to remain much the same. With low interest rates continuing to be offered, immigration plans, individuals continuing to save in the face of the Pandemic, and many returning to work, there’s no reason why home sales won’t continue to soar in the short term.

Further, it’s evident that homebuyers’ demand is still there because, well, the inventory supply continues to remain at an all-time low; an unfortunate and frustrating situation for buyers, however, a great problem to have for sellers. According to the Canadian Real Estate Association (CREA), this demand will continue into the spring of the year.

As mentioned in the preface, however, these persistently low inventory rates may birth a cooling-off of the Canadian real estate market in the second half of 2022. Until then, the stage is set for a continuation of strong sales throughout the next several months.

The Impact to Come

The impact of inventory on home sales is likely set to hit its peak towards the end of the first half of 2022. Here’s why…

First and as mentioned earlier, low inventory rates will continue to play a role in the inevitable rollercoaster of sale prices. Sure, prices will likely continue to skyrocket in the short term, however, it can’t rise forever and many Real Estate Experts feel the end is near. 

Second, because of the level of competition seen from bidding wars throughout the country, sellers are going to continue to capitalize as long as they can by unapologetically increasing prices. Not to mention the willingness of buyers to offer above the asking price; great news in the interim, however, inflation and buyer hesitation will catch up. 

Finally, while low lending rates have been alive and well since the beginning of 2021, they’re likely to rise in the coming months, according to the Canadian Real Estate Association and most recently the Calgary Real Estate Board; not to mention the stoppage of federal funding for those who’ve required it during the pandemic because of job loss and otherwise. 

For these reasons and more, it’s forecasted that the lack of inventory will impact home sales and result in a cool-off in the market by about 7.5% by the end of 2022. In short, there’s no doubt that the Canadian housing bubble is in full swing. Only in time, however, will we be able to determine the true impact of such historic events. 

And that is the gamble. Do you wait and see if the Market does in fact cool off or do you buy NOW? When the Pandemic started, many Real Estate experts predicted House Prices would fall significantly and Mortgage Rates would climb. The Exact opposite has happened. 

Housing Prices have soared and Interest rates remain low. So…what now?

Even if the market cools off by 7.5%, does that mean house prices will fall 7.5% or are the experts saying that the “rate of Appreciation” will fall 7.5% from current historic levels. It is not easy to tell!

Is Rent to Own the Way to Own?

If you are hoping to get on the property ladder TODAY but are not in a mortgage ready position, Rent to Own may be the option for you. In a Rent to Own Program, the price you pay for your home “In the future” will be today’s Market Value plus 3-4% Appreciation.

The future Purchase Price is not subject to Market Growth if appreciation is Fixed so your future purchase price is Capped. This feature of Rent to Own may protect you from being priced out of the market in the future.

So, if the “cooling” off means that Appreciation rates will fall from current levels of 20-25% in some areas to 12.5 – 17.5%, it means that Rent to Own has GREAT Value for your Family.

With Rent to Own, you can protect your family  from paying Market Value when you are in fact mortgage ready. 

The difference in the Future Purchase price between a $ 600,000 property in a Market that is appreciating at 12% versus a Rent to Own Program that appreciates the value of the property by 4% is $ 168,000 in 3 years.

 This means that if the market appreciation rates cool off by 7.5%, you are still going to pay $ 168,000 more for the same property if you buy at Market Prices in 3 years. If the market does not correct it just gets worse.

Real Estate has always been the major component of any personal wealth. Owning a Property is a Dream of most Canadians. Do not miss your chance to realize that dream of home ownership.

Use Rent to Own to protect the price you pay in the future! Rent to Own can put you in a position to secure a property “TODAY” and secure a future you want for your family. 

If you’re looking to become a homebuyer but don’t know where you stand when it comes to the current state of the market, we can help!

To learn more, check us out at https://homeownersoon.com/rent-to-own-application/