We’re officially into the New Year, 2023 now, and as we talked about briefly last week we’re leaving quite the upheaval of one behind us with 2022 when it comes to the Real Estate Market in Canada. With the first blog entry of the year here at Real Estate Leads we always provide something of a Real Estate Market and Housing Outlook for the year and so that’s what we’ll be doing again with this first 2023 entry.
The biggest overarching theme is the one you’ll hear from anyone who is a real estate industry insider or even casual overseers who have a strong understanding of its workings. And that is the market cooling that was the primary characteristic for last year is expected to continue. And quite possibly continuing well into the coming year at that. Not surprisingly, we can also expect to see the major demand-centric markets in cities like Vancouver and Toronto continue to be insulated against too much cooling.
It is for this reason in part that it may be realtors in other parts of the country who see potential clients be more hesitant to put homes on the market, and for these agents our online real estate lead generation system here at Real Estate Leads can be a very good aid when it comes to expanding your reach into what may be a reduced client base in the area of the country where you are working as a real estate agent.
Let’s get into it.
Rates, Inventory, and Cycle Factors
The bulk of market economists and experts say that prohibitively high mortgage rates, low inventory on the market and uncertainty about where the Bank of Canada’s interest rate cycle will peak are going to continue to fuel a cooling real estate market. At least through the earlier part of the coming year.
Recently available data from the Canadian Real Estate Association (CREA) shows that home prices in Canada went down 19% from a February peak to November, adjusted seasonally, when the average sale price came in at just under $637K. The overall belief is that the slowing pace of decline in both home sales and prices are indications that the early signs the correction are approaching a final stage.
Any low points reached in the early part of 2023 would vary from market to market as a result, and most of them would be coinciding with the Bank of Canada stabilizing its benchmark interest rate. The biggest takeaway there is that this point -whenever it comes – might be where affordability is best for prospective buyers.
Re/Max Canada’s Housing Outlook 2023 has aggregate home prices dropping 3.3% in the year, but other agency surveys have it expected to be lower than that. So we can work with just over or under 3.5% as the likely highest point it will be for the decline rate.
Cities in Ontario that are expected to be more vulnerable for these declines in 2023 are Greater Toronto Area (11.8% lower), Barrie (15% lower) and Durham (10% lower). For B.C. they are Greater Vancouver (5% lower), Kelowna and Nanaimo (both 10% lower)
Growth for Some Markets
Conversely, some markets may see growth. Cities across the countries that are predicted to have gains in median home values are Halifax (+8%), Calgary (+7%), Ottawa and Kingston (+4%) St. John’s NL (also plus 4%) and Saskatoon (+3%).
Another very noteworthy part of the forecast is that condo sales in major urban markets are expected to be more robust than the 2 year prior. In most big cities condos and downtown properties didn’t see major price inflation during the pandemic, and they have further to fall as the market cools because of that.
Realtors working in all major urban centres in Canada can expect there to be strong demand for condos, and especially among first-time homebuyers as has always been the case.
Foreign Homebuyer Ban Now in Place
The last newsworthy development we’ll touch on with our market forecast – at least for this entry in the interest of not stretching it out too long – is that the new foreign homebuyer ban took effect yesterday on January 1st. The aim of course is to prevent the extent of housing market speculative investment in hopes that it will counter housing unaffordability.
There is much to suggest that this is yet another example of the Federal Liberal Government dressing windows yet again and enacting legislation for the simple aim of appearing to be ‘doing something’ while knowing full well this will do next to nothing in as far as making more homes more affordable. Par for the course for a government that is all about optics and nothing more when it comes to pretty much everything, but opinions aside let’s look at this from a substantially critical angle instead.
New Zealand enacted almost the exact same federal legislation in 2018 that banned foreigners from buying homes in their country. The median prices of homes in Auckland, Christchurch, and elsewhere all remain above $1 million dollars with further value appreciations expected moving forward. These types of attempts at market control always fail spectacularly, and it’s unfortunate that people believe these types of pandering moves will do anything to improve housing affordability.
The ONLY way to improve housing affordability is to increase supply. It is as simple as that. And all of this doesn’t even begin to touch on how this will make it more difficult for realtors to work with clients AND make buying a home more expensive for the few that do find a more affordable home resulting from a foreigner not being able to buy it.
Despite what some people want to believe, foreign buyers do not factor into the real estate market to nearly the extent they’re made out to. The majority of homes sold in Canada are sold to Canadians, and that has always been the case. Including Vancouver, Toronto, Montreal, Halifax, Edmonton, and Calgary.
Happy New Year Everyone
__
Sign up for Real Estate Leads here and receive a monthly quota of qualified, online-generated buyer and / or seller leads on clients ready to either sell a home or buy one in the same region you’re working as a realtor. You’ll receive these leads exclusively, meaning no other realtor will receive them. It is your opportunity to be first in touch with these people, and impress on them how you’re the professional they need to make their home buying or home selling process the best it can be. This online resource is great for growing your client base.
