For thousands of people, 2022 is the year that they take possession of a brand new home.
While it’s exciting to turn the key for the first time in your new home’s front door, there’s several national and global influences at play that will shape the closing and possession phase of buying a property this year.
If you’re preparing to move into new digs in 2022, here are a few things that you may want to take into consideration.
Furniture and appliance orders are still delayed
If you’re waiting on that sectional to arrive or the bed frame you love to come back in stock, you belong to the many people who have been impacted by furniture delivery delays and shortages.
Several countries around the world have been experiencing long delivery times thanks to a host of COVID-19 and global supply chain problems, from backed-up shipping ports to factory closures overseas. The red-hot real estate market, which has seen renters and homeowners move to new digs throughout the course of the pandemic, has also contributed to the demand for home furnishings.
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Experts are hopeful though that things will return to business as usual this year as supply chain challenges ease in 2022.
Mortgage interest rates are staying low, for now
Since the Bank of Canada started cutting its mortgage-influencing overnight rate back in March 2020, new and existing mortgage holders have been able to take advantage of some of the lowest interest rates in history. That could come to an end this year, impacting those looking to lock in a mortgage on a new property.
In its final policy interest rate announcement for 2021, the BoC said that it intends to hold its 0.25 per cent overnight rate at that level until mid-2022. Between Canada’s Big Six banks, predictions have been swirling around a potential four quarter-point rate hike by the end of the year.
This could have a ripple effect on the housing market altogether, with some experts drawing comparisons to 2018, when interest rates increased three times and the stress test was introduced, dropping sales volume by 19 per cent. The current stress test rules for uninsured mortgages in 2022, so far, remain unchanged.
Labour shortages are leading to higher costs
The residential construction industry has experienced widespread labour shortages, making new builds and home renovations take longer to complete and cost more money than usual.
Many tradespeople are hitting retirement age, and there aren’t enough young people or immigrants signing up to fill those jobs. Buildforce Canada estimates the construction industry will need to add more than 116,000 workers by the end of the decade to keep pace with expected demand growth and retirements.
Those labour shortages have been exacerbated by the COVID-19 pandemic fuelling Canada’s hot housing market, producing labour imbalances and geographic mismatches. According to Statistics Canada, construction job vacancies increased by more than 34,000 — or 83.7 per cent — between the third quarter of 2019 and the third quarter of 2021.
The lack of skilled labour has increased demand for tradespeople to complete projects like kitchen and bathroom remodels, as well as flooring and electrical work. Keep that in mind and expect increased costs if you plan to begin any projects this year.
Surging lumber prices make construction more costly
Supply chain issues and reduced inventory resulting from natural disasters and the COVID-19 pandemic have sent lumber prices skyrocketing once again.
According to Random Lengths, lumber prices have nearly tripled since August, surging to more than $1,000USD per thousand board feet. As a result, the National Association of Home Builders (NAHB) estimates the average price of a new single-family home has increased by more than $18,600USD, with Canadian consumers experiencing similar cost increases.
Inventory issues stem from strong housing markets and a destructive summer wildfire season along the West Coast, while B.C.’s record November rainfall snarled supply chains and produced a backlog at the Port of Vancouver. The resulting project delays and increased demand for lumber led to the recent spike in prices.
Prospective homeowners will have to factor in rising lumber costs before choosing whether to proceed with new construction or renovation projects.
There are still rules around showings and indoor gatherings
With the fifth wave of the pandemic forcing provinces to resume COVID-19 restrictions, those moving into a home in 2022 may need to think about current safety requirements in their region, especially those that impact real estate and communal living areas.
For instance, in Toronto, COVID-19 bylaws were recently extended to April 2022, requiring that masks be worn indoors in shared spaces such as lobbies, elevators and stairwells inside apartment and condo buildings. Under Ontario’s modified Step Two of the Roadmap to Reopen, real estate open houses are prohibited and showings are by appointment only. Meanwhile, indoor gatherings are now limited to just five people.
These are important to keep in mind if you’re doing final walkthroughs, inspections or other business that might impact the possession process. Be sure to review guidelines from your local public health unit or provincial government for the most up-to-date COVID-19 restrictions.