What lessons can we learn from the past year? 

2022 is drawing to a close. So what can buyers, sellers and investors expect from the real estate market for the upcoming years? 

Despite a flurry of “alarming” news and numbers, the GTA market and the overall market of the province of Ontario have a strong basis of underlying fundamentals. Both of them will continue to fuel growth. Certainly, this growth will be at a slower pace than the record years of the pandemic. However, the years 2020-2021, should be treated as outliers rather than normal. 

So what does it mean for you? If you are currently studying the market in order to make a decision, it is important to rely on solid indicators. Getting a second opinion from a professional broker may also help you ease the process.

For example, make sure you will have the full picture of the data you chose to base your analysis on. The Toronto Regional Real Estate Board (TRREB) which releases monthly numbers on the state of the market, may be a good source for indicators of the general state of things. However, monthly comparisons from one year to another only encompass part of the trend. 

To get the whole picture, it's important to look at the latest twelve trailing months and see in which direction the trend is pointing. This kind of analysis will allow you to have a better idea of where you are located in the real estate cycle and may help you prepare your action plan accordingly. 

Another important point that was discussed abundantly this year was interest rates. In Canada, the average mortgage rate was around 2.34 in January and is now hovering around 4.50% as of this writing. 

Understandably, a rapid rise of more than 2% has had an impact on the borrowing ability of some buyers. However, strong underwriting standards are one of the main reasons the Greater Toronto real estate market can continue to grow in a healthy manner. Plenty of opportunities are also still available for investors since interests on a mortgage are tax deductible. 

Over 2022, Canadians conserved a very high savings rate, almost 30%, which means many people still have opportunities to invest a good portion of their savings back into the market. 

While some may decide to stay on the sideline and wait until they have a clear vision of the situation and let the dust settle a bit before taking action again, according to economic forecasts, we are drawing near the end of the rate hike cycle. Economic indicators may have been turned upside down over the last year, but the fundamentals underlying the GTA market continue to remain very strong. 

To elevate your chance of success and make the process as smooth as possible, adding a professional broker to your team to help you navigate this market can be your best-performing asset.