Mortgage Blog

2022 Ontario housing market defined in 5 charts

January 13, 2022 | Posted by: Ronice Harrison

Housing prices in Ontario are growing at their highest rates in 40 years. Big changes are happening, and to many experts, it's clear that a new era is dawning for the industry.

So, with these incredible changes, what will the Ontario housing market look like in 2022?

Using data from dozens of Canadian economists and analysts, we put together 5 charts that define Ontario's housing market in 2022.

Read on to get unique insights into the future of this market with charts that speak volumes.

Interest Rates Set to Rise

the Bank of Canada is widely expected to deliver interest rake hikes this year.

Scotiabank Economics expects borrowers with the highly popular five-year term mortgages that renew in 2022 to see their rates increase by an average of 36 basis points (bps)...

This means that if you are taking our (or renewing) your mortgage this year, you'll be paying about $50 a month more for each $250K borrowed.

2023 is also forecast to see additional rate increases of about 45 bps, or around $65 in additional monthly payments.

With these predictions, you can see why Ontario mortgage brokers recommend you get your pre-approval as soon as possible!

Housing Costs Are Up... And So Is Household Debt

Canada’s housing bubble has grown into a MASSIVE problem for the Canadian financial system.

House prices are much higher in Ontario than in most other countries, and levels of household debt are becoming a major risk to homeowners.

This chart shows that house prices in Toronto, Vancouver, and nationally have grown about 425% to almost 500% over the past twenty years, with household debt keeping pace.

Housing Dependence Is Not Ending Any Time Soon

Amid the many staggering economic statistics that emerged from the COVID-19 pandemic, this may be the most staggering: in the first three quarters of 2021, residential construction accounted for a larger share of Canadian GDP than business investment!

It's something that has never happened before in Canadian history, not even close.

In a typical year, business investment tends to have twice the economic impact of housing, with about 12% devoted to business development and 6% to real estate... (including home building, renovation, and real estate agent fees).

The huge change in 2021 is caused by

1) record low business investment (tied with 1993 as the lowest on record), and

2) record high housing activity.

Looking ahead, housing is expected to simmer down from the 2021 extremes.

But overall, Canada’s heavy dependence on housing doesn’t look to end anytime soon.

Home Sales Are Still On The Rise

There's been a lot of focus on housing construction, but little focus on the real issue causing prices to explode...

And that's exploding demand for real estate.

When the Bank of Canada lowered interest rates in 2020, they stimulated demand and increased competition between buyers.

And as expected, higher competition for the same lot of goods means more inflation. That’s what’s happening with real estate.

From April 2020 to January 2022, Canada saw over 250,000 extra home sales above the historic average... Extra sales to the tune of an excess $150 billion spent on real estate according to BMO estimates. It’s about the equivalent of 6% of Canada’s GDP going to cover extra real estate prices!... Yikes.

Single Family Homes Are Becoming Precious Commodities

The number of single-family homes listed for sale in major Canadian cities has been falling for years.

In the Greater Toronto Area, single-family listings have fallen a stunning 77% from their 2017 levels! The main driver seems to be that new single-family construction is not sufficient to cover Canada's huge population growth.

From the 1970s until the 2000s, population growth averaged about 3 million people per decade. At the same time, new single-family construction averaged about 1.3 million. That's about a 2:1 ratio.

BUT, in the past ten years, population growth has surged to 4 million, while new single-family construction FELL to less than 1.1 million. Now, the ratio is more like 4:1...

Until Canada figures out how to fix this imbalance, we can expect single-family homes to be precious assets in major housing markets across the country.

In Conclusion...

Canada's housing market is dominated by two things: a) supply and b) demand.

What we've seen since the start of the pandemic is a huge imbalance of demand outweighing supply, but with rising interest rates... this could be changing in 2022!

So, before interest rates rise, get your mortgage pre-approval from Ontario experts at AQRE Lending.

Low down payment, self-employed, bad credit? We do it all!

Visit and get pre-approved today for Ontario's lowest mortgage rates, and service to fit any situation.

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