Real Estate Talk:
Market forecast for 2022
Prices will continue to rise along with interest rates
By Joseph Marovitch
October 21, 2021
Currently, the inventory of listed homes is at an all-time low, as are interest rates. Interest rates will not remain low as the 5-year rate recently increased to 2.19% from 1.99% at CIBC and TD. There is a likely possibility that interest rates will continue to rise as more people get vaccinated and the risk of infection decreases. With the pandemic behind us, there will be more spending, more inflation, and rising rates.
For those who amassed cash during the pandemic, from government benefits or working but having little to spend on, there will be a burning hole in the pocket to spend on entertainment, clothing and other items missing during the closure. Others will want to invest and put their money to work in real estate, the stock market, and other rising opportunities like bitcoin.
There is a likely possibility that interest rates will continue to rise as more people get vaccinated and the risk of infection decreases. With the pandemic behind us, there will be more spending, more inflation, and rising rates.
Then there are those using borrowed money to take advantage of past low-interest rates, who invested in property at inflated prices. These are the ones who will be hit hard with rising interest rates and inflation. Their expenses will rise but not necessarily their income.
While there is strife all over the world and disruptive division in the U.S., Canada is one of the most stable economic and political countries in the world today. This is known to many foreign nationals who want nothing more than to invest in a stable country. Therefore, we will continue to see foreign investment in Canada and Quebec. As far as Canadians are concerned, there is an opportunity to invest at home.
The Montreal real estate market will continue to flourish, interest rates will rise but so will income as the economy starts rolling again. In a matter of months, we will see more property come to the market, however, not enough to service the demand. At some point, inventory and demand will even out but for the foreseeable future real estate will tip more toward a seller’s market in Montreal. There are just too many people between the ages of 35 and 50 having or with children, who will be feeding the cycle of growth and demand for more room and larger homes.
‘At some point, inventory and demand will even out but for the foreseeable future real estate will tip more toward a seller’s market in Montreal.’
Montreal space is limited, causing real estate to rise in price but then there is an off-island opportunity, which has not gone unnoticed by developers, investors, and buyers. The Laurentians, where I worked before real estate, was a collection of small towns, lakes, mountains, and open countryside. Now there are developments everywhere and population increases all over. There is still plenty of space to build and cities are expanding in this area as well as in the Townships, Montérégie, Laval, Lanaudière, and other places.
Therefore, my forecast for Montreal is that inventory will increase but not catch up with demand. Prices will continue to rise along with interest rates. Buyers will invest and profit from the increasing value of their property as time passes. Those investing in income property will profit via rent but also by the ever-increasing value of their property. As well, property closer to the core of downtown will experience higher and faster gains than those further away.
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Next article: The purchase process reviewed
State of the market
According to the Canadian Real Estate Association (CREA), home sales rose by 0.9% in September. CREA states this is the first increase in home sales since March 2021. CREA also states new housing supply decreased by 1.6%.
‘We are still in a seller’s market, but buyers are getting some breathing room to negotiate.’
These figures indicate there is still a housing shortage, but more listings are entering the market. Interest rates are having an impact as well by reducing the number of buyers for each house and defusing the multiple offers that have been taking place all year. We are still in a seller’s market, but buyers are getting some breathing room to negotiate.
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Other articles by Joseph Marovitch
Joseph Marovitch has worked in the service industry for over 30 years. His first career was working with families from Westmount and surrounding areas, hosting children between the ages of 6 to 16 as the owner and director of Camp Maromac, a sports and arts sleep away summer camp established in 1968. Using the same strengths caring for the families, such as reliability, integrity, honesty and a deep sense of protecting the interests of those he is responsible for, Joseph applies this to his present real estate broker career. Should you have questions please feel free to contact Joseph Marovitch at 514 825-8771, or email@example.com
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