Still a month and a half plus to go in 2022, but we’re not too far away from the end of the year to start looking to next year. The story for 2022 when it comes to Canadian real estate has definitely been how the time frame between February and July / August saw the market be as inflated as ever and then as deflated as ever half a year later. That’s definitely been newsworthy, and in a sense it’s also been plenty concerning for homeowners who’ve been counting on utilizing the equities in their homes.
There was and continues to be all sorts of fallout from that, but the reaction to it is always going to be balanced because this sort of stuff is always cyclical, even though the highs and lows have never been as pronounced as they are these days. The market will come up again, and eventually it will go down again. And yes, desirable markets like Toronto and Vancouver will be more immune to the lows and more responsive to the forces that push up the values of real estate all the time.
Realtors and the profitability of being the business gets moved with the tides here too, and it is agents who are newer to the business who may feel more of the pinch when fewer homeowners put their houses on the market because of depressed home values. To that end our online real estate lead generation system here at Real Estate Leads here is an excellent way to get a leg up on the competition and continue to find new clients for yourself. That is dependent on your ability to present yourself as qualified pro, but enough said about that.
Let’s look at the expected 2023 real estate trends that are predicted to affect the industry as we move into 2023.
Ongoing Uncertainties
Where we are at now is that in contrast to the booming conditions of the past few years, we now see interest rate hikes, runaway inflation, and turbulence in the geopolitical environment casting a shadow of uncertainty over the global economy and the business of real estate. But could those realities make for the ideal time to start a reset? That could be true, and here’s why some industry experts feel that way.
Primarily they are saying that there can be a more intense focus on digital tools and other innovations that enable the business, and capitalizing on new opportunities that emerge during this period of change and embrace long-term fundamental trends.
One thing that we can see is tightening borrowing requirements and higher financing costs will continue to suppress the ability to raise capital and move housing projects forward. This will lead to competition between companies decreasing as players choose to sit out until the market settles. This is very opposite to what we saw last year, where an overabundance of capital was intensifying competition and pushing valuations up.
More Focus on Sustainability
There is also going to be more of a focus on sustainability and net-zero emissions. Business models that prioritize sustainability will give companies an edge and likely help them attract more institutional investments source new forms of capital in ways that less-committed companies won’t see in the same way. Another factor will be the implementation of ESG strategies that will affect both publicly owned and private real estate companies in Canada.
Overall though, supply is going to be the big-ticket issue for 2023. Companies and economies are grappling with the looming housing affordability crisis and ever-increasing immigration levels that are simply counterintuitive to the lack of housing and infrastructure in the country. Real estate companies are going to be likely to shelve housing development projects because of cost, financing challenges, and the high interest rates. This is a firm reality, and it’s going to be massively problematic if the federal government continues to aim for mammoth population growth through immigration.
On a more positive note, industrial real estate looks to emerge stronger in 2023. This looks to be true for warehousing, fulfillment, data centres, and self-storage. Plus real estate for health-related uses is shaping up to show strongly in 2023.
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