Some Canadians just don’t learn.

Too many homebuyers think they can time the housing market, believing the old adage that what goes up must come down. Well, when it comes to housing prices, that hasn’t proven true.

Housing affordability reached a 31-year nadir in Q3-2021, according to RBC Economics, as escalating housing prices and mortgage rates pushed the ratio of ownership costs to housing income to 47.5%.

Case in point: bidding wars are ubiquitous in Canada’s major markets, and they’re a growing phenomenon in smaller locales, too. Moreover, the Bank of Canada has concluded its quantitative easing program and that has caused fixed-rate mortgages rates to start rising, albeit not astronomically.

Robert Hogue, Senior Economist at RBC, says additional deterioration of housing affordability will result in the door being slammed shut on many would-be homebuyers -- certainly, a great many who believe they can still afford ground-related homes will be disappointed.

Then again, Canada’s most expensive markets can’t price everyone out forever. Hogue believes cities like Vancouver, Victoria, Toronto, and even Montreal and Ottawa, are due for decelerations.

“That would be the market’s self-correcting mechanism at work. So long as supply is slow in coming, much of rebalancing adjustments will fall on the demand side of the equation,” Hogue said.

The Omicron variant of COVID-19 has revived lockdown measures across the country, which, in turn, all but guarantee the Bank of Canada will not hike its overnight interest rate anytime soon -- definitely not by the middle of next year, as most observers predicted. Phil Soper, President of Royal LePage, says the Omicron wave’s impact on housing will almost certainly parallel previous infection upsurges, which is that, unable to spend on non-essentials, excess cash in Canadian households will find its way into the housing market.

“We know that in mid-2020, the savings rate in Canada, which is typically at 2-3% of income, peaked at over 28%,” Soper said. “People were saving an astonishing amount of cash and they were either sitting on it or moving it into real assets instead of going on vacation. We believe that, with concerns around another wave, another variant will cause people to delay travel plans, delay getting out and mixing in the community again, as sad as that is; they’re less likely to go to a big event or a concert, and that money will flow into their savings.”

Each lockdown elucidates the importance of sufficient household space, Soper added.

“This reason has less directly to do with economics and more to do with an emotional desire to find appropriate shelter for one’s family,” he said. “We believe companies that may have had aggressive plans to return their employees to the office could delay those plans in the face of employment concerns. And with people working from home for longer, home takes on additional significance.”

Royal LePage predicts the national aggregate home price will rise by 10.5% in 2022 to $859,700, with the median price of a detached home surged by 11% to $918,000, and condominium prices averaging 8% growth to $594,000.”