The Greater Toronto Area real estate market is in something of a frenzy as buyers seem prepared to pay whatever it takes to buy the limited number of homes available for sale.
The Toronto Regional Real Estate Board (TRREB) says sales fell 18.2 per cent year over year in January, but not because homes suddenly weren't a hot commodity. There weren't many to buy, as listings fell 15.5 per cent.
Active listings dropped 44 per cent to 4,140, the lowest in more than two decades. As a result of the tight market conditions and low interest rates that have helped push buyers into the market, prices continued to soar 33.3 per cent from last year and 4.1 per cent compared to the previous month.
The largest year-over-year price gains were in Durham (44.58 per cent), Orangeville (40.74 per cent), and York Region (38.18 per cent).
TRREB says the situation will continue without increased supply, especially with expected record immigration.
"It is clear that 2022 is starting off the way 2021 ended in terms of the relationship between demand and supply in the GTA housing market. We have provincial and municipal elections this year in Ontario," said TRREB CEO John DiMichele.
"These are the levels of government whose policies impact real estate development the most. With this in mind, it will be very important for voters to understand exactly what parties and individuals vying for public office propose to do to alleviate the lack of inventory and housing choice in the GTA in the years to come."
Greater Toronto Area real estate in 2022
TRREB expects 2022 to be another strong year. It predicts sales will dip to 110,000 for a couple of reasons but prices will continue to go up.
"First, higher borrowing costs in 2022 will see some households on the margin of affordability temporarily put their purchase on hold," said TRREB chief market analyst Jason Mercer.
"Second, after above-average per capita home sales in 2021, there will be some give-back in 2022, simply because the pool of ready buyers will be smaller. Finally, the perpetual lack of inventory in the GTA will preclude some willing buyers from getting a deal done – simply put: you can't buy what's not available for sale."
The Bank of Canada has made it clear that it will begin raising rates soon, something TRREB says has historically led to fewer transactions.
Ipsos polling found buying intentions for 2022 dipped relative to previous years but the share of buyers very likely to buy remains in line with the last few years. In other words, those who are committed to buy will but others may put their purchase on hold. The percentage of first-time buyers is expected to drop.
The poll also found detached homes remain the most popular, especially in suburban areas.
Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.