Your Real Estate Agent in Mississauga

2022 ended up being a tumultuous year. What started out as a continuation of the great boom came to a screeching halt in early March. The Bank of Canada, along with many other central banks in the world, decided that inflation was a problem, and they began an aggressive series of interest rate hikes.

We experienced a total of 8 interest rate hikes over the past 12 months. The “overnight” rate, which is the fundamental rate that all other rates, including mortgage rates, are based on, went from a low of 0.25% to the current 4.50%.

This had a profound effect on the Canadian real estate market.

Across Canada, real estate sales plummeted, especially in the higher priced markets of Vancouver and Toronto.

Here in the GTA, at the end of 2022, sales are down about 50% year-over-year.

So what happened with prices?

Prices have dropped as well. Depending on the market and type of property, anywhere from 15% to nearly 30% in some areas. The only thing which has prevented a bigger drop is the lack of houses and condos for sale.

Many people decided to pull their homes off the market, waiting for things to improve.

But will they improve in 2023?

Fundamentals

We must not forget that there are three fundamentals that drove our local real estate market in the decades-long boom that we have been enjoying:

1.) ultra-low interest rates

2.) excellent economic performance of GTA economy, which has been a powerhouse for creating high paying jobs

3.) continuing massive immigration into the region

The first fundamental, that of ultra-low interest rates, is gone. Rates may rise a bit more, they may stay flat, or they may drop a bit, but the era of 1.5% mortgages is over.

The second fundamental, that of a booming local economy, has softened somewhat, although the local economy in the Greater Toronto Area is still doing fairly well.

As for immigration, 2022 saw a record breaking number of people admitted to Canada. Official numbers show approximately 500,000 newcomers admitted through traditional channels, plus at least 200,000 Ukrainian refugees admitted. Canada grew by somewhere between 700,000 and 800,000 people during 2022, the largest yearly increase on record.

Looking Ahead

We are in uncharted territory here in 2023. 

2022 brought a massive pivot in the real estate market, and although sales and sales prices have dropped significantly, there is still risk going forward.

We monitor the Toronto and Mississauga real estate markets on a daily basis, and will keep you posted on developments as they happen.