Q1 2022 Newmarket Real Estate Record High Price!
The first quarter of 2022 has come to an end, and Newmarket’s residential houses, like havoc in the sky, have pushed most of the average prices to an all-time high!
Those who participated in the market to buy a house in the first quarter of 2022 can truly have a feeling of Struggling in the crazy market.
Some first-time buyers, work very hard, but seeing their purchasing power depreciate in the bidding wars again and again, their expectations for quality life have to be downgraded by experiencing failure in the bidding war.
Renters also face competition. In order to win the generally accepted standard First + Last payment, they need to provide all the verifiable documents as many as close to a mortgage application, and pets are even more unwelcomed.
Among the buyers who have successfully won the bid, many face the dilemma that the appraised value of the house is lower than the purchase price, which leads to the additional down payment or higher interest rate which ultimately increases the cost of the buyer.
Maybe the seller was happy. Of course, they cashed out and they cared more about capital gain tax; while remembering if you don’t want to worry, don’t pay attention to your neighbors whose sold price might be higher.
It is said there will be a full range of heavy blows to the house price next.
High housing prices are really already on the way to facing a 360-degree blow. since 2022 is an election year, the real estate strategy is the best way for all parties to show their care for people. These heavy blows include raising interest rates, Quantitative Tightening, taxation, and adjustment of real estate policies. now, the Change to Foreigner real estate speculation tax announced on March 29 has been on the table, and there should be many more hidden under. The Affordability Task Force in February provided the government with a 33-page report with 55 real estate recommendations.
Please pay attention to April: On April 7, 2022, the Canadian government will announce the 2022 budget, and there might be a true 50 basis point interest rate hike.
Home prices are soaring and the call for change is approaching
Some people say don’t expect the market will go down just because of the adjustment of foreign real estate speculation tax change, I guess the Home itself can defend its height by saying 400,000 immigrants are on their way to Canada. Like Chief Economics from CIBC Mr. Tal Benjamin said: raising interest rates is with an intention to make the economy better, What real estate fears is not raising interest rates, it is too fast of raising interest rates if it’s beyond the extent of the economy can hold. It is very difficult for common people to handle in a very fluctuated market!
Real estate constitutes a big part of the Canadian Economy, and no one wants to kill the economy in one fell swoop, even in the name of cracking down on high real estate prices. Even Covid-19 knows constant evolution so to reach a point humans and covid can be Co-existent. What and How to manage the tools in hand so the economy can continue to improve without a hard landing?
“A revolution in the making”
In response to the widespread outcry over rapidly escalating housing costs, last year Ontario established the Ontario Housing Affordability Task Force. One of their recommendations is the call for the elimination of most residential zoning laws. They call to modernize the current planning system and return the As of Right that originally belonged to the owner back to the homeowner. The revolutionary nature of this proposal is, Without Approval from City, the owner will be able to have the right to choose a detached house, duplex, multi-apartment, etc.
There have been quite successful cases in New Jersey in the United States. Most areas of Vancouver in Canada have allowed houses to be converted into 2 residential units since 2018. California passed a similar bill in January, Oregon began to implement it in 2019, and New Zealand last year Pass similar bills. This brave proposal, if passed in Ontario, would have revolutionary effects.
Year of 2022, the start of a new real estate cycle
Today, when I was sorting out the real estate data for the first quarter of Newmarket, I was quite impressed with the new property cycle we are getting into.
This graph shows the home price trend of Newmarket from 1996 to the present covering 25 years. You will find the home price increase from 200,000 in 1996 to 1.1 million in 2021, an increase of 4.5 times, and a simple average annual increase of 18%. If we divide the 25 years into 5 cycles here is what each cycle looks like:
- 1996-2001, house prices continued to rise moderately; 2002-2006, house prices continued to rise moderately;
- 2007-2011, house prices experienced the impact of the 2008 financial crisis, and house prices moved sideways;
- 2012- 2016, housing prices rose rapidly;
- From 2017 to 2021, housing prices fluctuated violently. After hitting a record high at that time in 2017, they experienced a sharp dive, and after two years of adjustment, they reversed and refreshed a record high.
The next 5-year cycle will start in 2022. In the short term, there will be pressure to adjust. I hope to be healthier and better in the long run.