Out of all of the industries and financial markets in Canada, the real estate market is among the most saturated and highly sought-after markets in the country. This is doubly true in the case of residential real estate – regardless of city or province, residential real estate is at the top of everyone’s list as affordable housing becomes more and more of a concern.
This level of demand, along with the strain it has been putting on Canada’s residents for years, has led to the state of the residential real estate market becoming severely overheated. However, experts in the real estate field, such as Simon Kronenfeld, founder of AJGL Group, possess the financial literacy to make educated predictions for the future of Canada’s residential real estate market and are not as quick to give up home on the possibility of beginning to cool the market down for more accessible investments.
Canadian Real Estate: An Overheated Market
Canada’s real estate market has been climbing to dangerous heights over the last few years, with the effects of the pandemic escalating the nationwide housing crisis to the breaking point of an overheated market. As homes for sale in Toronto are hitting record-breaking prices that are rising at alarming rates – with last year’s benchmark of a million dollars a 22% increase in prices from the year before – the country is struggling to keep up.
At its core, Canada’s housing crisis and overheated market are primarily issues of supply and demand. With real estate prices overshadowing the average Canadian’s income by a wide margin, people are turning to blind bidding and bidding wars in order to secure a chance of securing a home, as well as for opting for lower interest rates on mortgages in anticipation of a total market collapse.
Professionals in the field, like Simion Kronenfeld, know how to interpret the signs of the overheated market in order to make practical predictions for the future.
How to Cool an Overheated Market
The current state of Canada’s overheated market demands action to push towards some kind of major change. While there is no one clear solution, there are a number of strategies that can be sought to take the first step toward cooling the market.
One of the strongest ways to try to start cooling Canada’s real estate market is to address the issue of supply and demand by boosting the housing supply. With fewer and fewer opportunities to find affordable housing in Toronto, a solution may be to stop searching for vacancies and start building more homes to make room for the population bottleneck. Boosting supply can also be achieved by addressing neighborhood density restrictions, allowing for more homes in the same amount of space.
Beyond taking the steps toward boosting supply, another strategy when it comes to attempting to cool the housing market is to restrict credit access and potential buyers. Adding more obstacles to the process of financing a property could make the market more selective, lessening the pool of applicants by imposing more drastic measures on the application process.
Signs of Cooling and Hope for the Future
While there are a number of strategies that pose strong opportunities to start making an impact on cooling Canada’s overheated housing market, the fact remains that the current state of the market demands action in order to avoid total collapse. Thankfully, the market is showing some signs of progress already: as interest rates continue to climb, the volume of applicants is beginning to decrease, easing the strain on the saturated market month by month. The effects of the pandemic are also beginning to subside as the world slowly returns to the new normal.