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Discussion Starter · #1 ·
The 2022 economic forecast of RE in Canada is pointing towards lower sales in units but a higher value appreciation. The drop in sales is due to extremely low inventories across the country. The valuation is strong due to high demand. Still, the ratio of listings to sales remains extremely high - where almost everything being listed is selling.

What astonishes me most is that Canada has experienced record numbers in 2020-2021 while in the midst of a pandemic. The last quarter of 2021 is seeing more normalized levels and this will most definitely continue into 2022.

The question is how will the spring market unfold and how will 2022 end?
 

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People are afraid to sell their homes because they fear they won't be able to afford to buy another one.

The "move up" scenario that drove RE for many years is all but dead. No listings means higher price for what is available.

It is a seller's market both when people sell and when they buy. I think there will be higher interest rates and some defaults, but people will happily gobble them up at a discount. The banks won't lose anything. CMHC will carry on and a few unlucky people will get hosed.

People will hang onto their homes for as long as possible, even if it means living like a monk.
 

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Who knows. Didn't almost everyone predict the market would crash at the onset of the pandemic? It did the exact opposite. Now almost everyone is predicting the market will keep going up, so maybe the opposite will happen again.

I think the pandemic has just magnified one aspect of shifting demographics -- millennials reaching their peak home-buying years -- while distracting from the bigger demographic picture. The current marginal buyer is a dual-income couple making well into the six-figures, but there is a limited supply of those buyers. Fewer young people are getting married and starting families. The majority of millennials have either already bought or are priced out. Single people of all ages are mostly priced out. The zoomers (Gen-Z) are still in college or just starting their careers and won't benefit from the massive transfer of wealth that helped millennials get into the market. Gen-Xers might have the means to buy, but most already own homes. Boomers holding tons of real estate are starting to think about downsizing. Meanwhile, the boomers' parents in their late 70's to early 90's are passing away. We're also in a construction boom with housing starts at more than a 40-year high. Add it all up: diminishing demand in the face of increasing supply. Don't expect immigration to fix this problem because immigration can't overcome demographic trends -- even the government knows that.
 

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Discussion Starter · #5 ·
In fact, new construction projects of single family dwellings are predicted to decline. OTOH, rental builds are on the rise.
Lots of focus on new generation but I see the opposite. I think a lot of retirees are holding on to their RE which is the main cause of supply shortage. If they don't downgrade, those wanting to upgrade have little room to move.
Immigration has an important role to play. They contribute to driving the first time home buyers market as well as the rental market. They also contribute to maintaining low unemployment but that is not a current issue we are experiencing.

Rates could rise, but I don't see that as a driving factor. It just makes a lot of white noise. Borrowers are already qualifying with a bench mark rate - currently 5.25%, so we have a long way to go before people start using rates as an excuse.
 

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In fact, new construction projects of single family dwellings are predicted to decline. OTOH, rental builds are on the rise.
Lots of focus on new generation but I see the opposite. I think a lot of retirees are holding on to their RE which is the main cause of supply shortage. If they don't downgrade, those wanting to upgrade have little room to move.
Immigration has an important role to play. They contribute to driving the first time home buyers market as well as the rental market. They also contribute to maintaining low unemployment but that is not a current issue we are experiencing.

Rates could rise, but I don't see that as a driving factor. It just makes a lot of white noise. Borrowers are already qualifying with a bench mark rate - currently 5.25%, so we have a long way to go before people start using rates as an excuse.
That's shitty, but you're probably right. I was just playing devil's advocate, mixed with a bit of wishful thinking... lol. Thanks for the dose of reality.
 

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What would the situation have looked like if home owners didn't collect CERB or couldn't defer mortgage and auto loan payments ?

We may be about to find out.
 
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