The common forecast for 2022 is that the Canadian real estate market and the Ontario housing sector could experience somewhat of a cooling down phase. From homebuyer fatigue to rising interest rates, there are a few factors that some industry observers believe could result in either a slowdown in growth. Does the same prognostication apply to the Niagara housing market?
Like other places across the province and broader Canada, Niagara has been suffering from a shortage of residential properties available for sale. Moreover, when homes are listed for sale, it does not take long for them to be sold.
Looking forward, real estate activity in small towns could continue its upward trajectory and remain strong in 2022, with some regions potentially eclipsing major urban centres.
For now, let’s take a closer look at how the Niagara housing market performed last year.
A Look at the Niagara Housing Market
Despite a cold and snowy winter, the Niagara real estate market has been sizzling, buoyed by declining inventory levels and an environment of low interest rates. It has been a year that, according to the Niagara Association of REALTORS (NAR), exceeded almost all expectations.
NAR data show that residential sales tumbled 15.2 per cent year-over-year in December, totalling 473 units. Nearly every area of the Niagara housing market, from Fort Erie to St. Catharines, witnessed a decrease in home sales.
At the same time, price growth swelled to close out 2021, surging at an annualized rate of 34.5 per cent in December to $720,200.
Last year “not only met our expectations, it surpassed them with record after record along the way,” the association said in a news release. “The question then becomes; will the housing market in 2022 continue at the same pace, or is there a possibility of a cooling-off and a downturn?”
Supply is a factor that has been affecting almost every region in the Canadian housing market. Niagara was no different, although the number of new residential listings edged up 2.5 per cent year-over-year, totalling 403 units in December.
Meanwhile, new housing construction slowed in December year-over-year, with housing starts slumping 29.4 per cent to 163 units. On an annualized basis, however, housing starts rose 6.85 per cent to 2,635 units, according to the Canada Mortgage and Housing Corporation (CMHC).
Niagara Housing Market Favours Sellers
So, with so much talk about a red-hot housing bubble on the cusp of popping amid rising interest rates and tightening mortgage standards, will Niagara suffer a downturn in 2022?
Not quite, says the Niagara housing association.
Despite the fact that the Bank of Canada (BoC) is anticipated to pull the trigger on a rate hike this year, borrowing costs are still historically low, meaning that cheap credit is likely to remain, giving homebuyers more purchasing power.
Local industry observers are suggesting that Niagara could “buck the trend” of a deceleration in national home sales.
“The pace of the market will be tempered by supply, higher prices, and higher interest rates nationally but because Niagara Region continues to be attractive to GTA centric buyers, there is reason to believe that Niagara may ‘buck the trend’ and that the number of sales will exceed 2021’s record-breaking pace,” the group noted.
Indeed, supply and demand will play an important role in Niagara real estate: low inventory is the norm, and strong buyer demand is ubiquitous.
Does this mean that 2022 could be a good year to sell a residential property? Market conditions in Niagara do favour sellers. Growth may not accelerate as it did in the first 18 months of the coronavirus pandemic, but higher prices and stubbornly low housing stocks are more than likely to remain, experts assert.
According to the RE/MAX 2022 Housing Market Outlook, smaller cities and towns are expected to attract homebuyers and sustain the broader boom. Overall, Niagara will likely continue to be a seller’s market, with average prices anticipated to advance 14 per cent to a little more than $786,000.
“Less dense cities and neighbourhoods offer buyers the prospect of greater affordability, along with livability factors such as more space,” said Christopher Alexander, president of RE/MAX Canada.
Indeed, Niagara offers so much more than just the iconic Falls; one only needs to look at the real estate figures emerging from this region to know that it remains a highly coveted destination to both visit and live.