We’ve all been hearing that housing supply is at an all-time low in Ontario. If more properties aren’t listed, the current inventory will be over by March 2022. Real estate sales have already dropped by 10% in January 2022 compared to December 2021. Several factors contribute to low housing supply but there are three main reasons:
1. Too many studio and 1 bedroom condos
When it comes to buying a house in Canada, most people prefer townhouses, semis, and detached houses. They are spacious and you get a front yard and backyard. While condos don’t offer extra space outside, they can be made bigger to accommodate families. However, most condos in the GTA area are designed for investments. Developers target investors who can buy multiple units at once and then lease out to students and young professionals.
A family of 3 or more can’t live in a 400 square feet condo with a wall kitchen and no personal space. Older condos in Mississauga that are over 1,200 square feet are a practical choice and you’ll find many families living there. If you find an old condo for sale in Mississauga and can purchase it, go ahead because it’ll be worth every dollar!
2. New construction properties are behind schedule
Due to the pandemic and supply chain delays, pre-construction projects are 6-12 months behind schedule. Another reason is a sharp decrease in single-family home projects over the past 13 years. They increased production of condos and townhouses because they benefit more from their sales. These types of properties also take less time to construct.
3. Lower mortgage rates
Bank of Canada dropped the mortgage rate from over 5% to less than 2%, which encouraged many Canadians to become homeowners. Buyers entered the market to take advantage of record-low interest rates. Demand grew overnight but house supply couldn’t. Houses started selling for $300K to $400K over asking. Many people who didn’t want to purchase a house tried to panic buy thinking that prices would increase even more.
Any hope for new home buyers?
Yes, there’s hope for people entering the real estate market this year. Danielle Hale, Chief Economist, Realtor.com, projects that the housing market will stabilise with inventory levels reaching before-pandemic levels.
Work with an experienced real estate agent to understand the current housing market of your neighbourhood or cities you’re interested in! I always recommend remote workers to consider moving away from the Greater Toronto Area. Ontario has some hidden gems that you should strongly consider before purchasing a house.
For more information, please contact me at firstname.lastname@example.org or +1 (905) 867-4828.