after years of frenzy canadian housing market During COVID-19 Pandemic, 2022 sees reversal in most industry as Bank of Canada interest rate hike Cities from coast to coast chilled the residential real estate sector.
Most economists and experts who spoke to Global News say they expect 2023 to continue cold, citing prohibitively high mortgage rates, low inventory on the market and uncertainty over where bank of canada Eventually the interest rate cycle will peak.
Official says Bank of Canada is ‘still prepared to do coercion’ on interest rates
read more
But where will falling prices hit the bottom out of Canada’s housing sector? And will all markets and asset classes be affected equally?
According to industry experts, here are the housing trends and markets to keep an eye on in 2023.
Where will prices bottom?
The latest available data from the Canadian Real Estate Association (CREA) shows that, on a seasonally-adjusted basis, home prices in Canada fell 19 per cent from a peak in February to November, when the median sale price was $636,838.
When will the foothills come? RBC assistant chief economist Robert Hogg said a note on december 19 He believes that with the slow pace of decline in both home sales and prices, “there are early signs that the recovery is entering its final stages.”
He said prices could eventually come down in the “early part of 2023,” but cautioned that the timing would vary from market to market.
Hogg suggested that this bottom level would coincide with freezing the Bank of Canada’s benchmark interest rate – the central bank indicated in December may be near the end of your hiking cycle – and for those looking to enter the market, this could be where affordability is at its best in years for potential buyers.
While spring may mark a low point for prices, Canadian brokerages are not expecting significant changes between 2022 and 2023.
Ray/Max Canada said in their Housing Outlook for 2023 that the overall price of a home is expected to fall 3.3 percent over the year, while Royal Lepage’s annual survey estimated Only one percent drop in prices,
Chris Alexander, president of Re/Max Canada, told Global News in late November that Bank of Canada interest rates are the “big wild card” that will determine when buyers and sellers alike are jumping back into the market.
Some housing markets may see price rise
Some cities in Ontario are particularly vulnerable to Re/Max projects in 2023, with steep price drops expected for the Greater Toronto Area (down 11.8 percent), Barrie (down 15 percent) and Durham (down 10 percent).
Parts of British Columbia are also expected to see declines, such as Greater Vancouver (down five percent), Kelowna (down 10 percent) and Nanaimo (down 10 percent as well).
Re/Max Canada’s 2023 housing outlook shows prices rising in some markets and falling in others. Exact data was not available for Montreal as of press time.
But some parts of the country are set for growth in 2023, Re/Max forecast.
Re/Max expects prices to increase in cities including Halifax (up eight percent), Calgary (up seven percent), Ottawa and Kingston, Ont. (up four percent), St. John’s, NL (up four percent) and Saskatoon (up three percent).
Corinne Lyall, owner and broker at Royal LePage Benchmark in Calgary, says one reason the city is doing well in 2023 is that it hasn’t seen markets in BC and Ontario see price increases as dramatically during the pandemic. did.
While Calgary saw only modest growth during that time, Lyle says it has basically become a more affordable option for people living in more expensive provinces, who are now able to work from anywhere and for less money. I can buy big houses.
The benchmark cost of a detached home in Calgary was $630,236 in November according to the local real estate board, almost a third of the $1.86 million price tag on the benchmark detached home in Vancouver.
“Our price point is very low for a big city,” says Lyall. “You can buy twice as many houses here.”
Lyall said that in times of economic uncertainty, the Alberta market is also buoyed by the recent strength in the oil and gas sector. They believe the traditional energy industry background, boosted by Calgary’s efforts to diversify into a tech hub in recent years, sets the city up as an attractive prospect for Canadians looking to relocate. Is.
“I think people are still looking at it as a place of opportunity,” she says.
Condos, urban centers expected to do well
According to experts who spoke to Global News, another segment of the Canadian market in 2023 is condos and properties in urban cores.
John Pasalis, president of Realosophy Realty in Toronto, says that, like Calgary, condos and downtown properties haven’t seen major price inflation during the pandemic, and therefore have fallen further as the market cools.
In addition, the return to the office amid the lifting of COVID-19 restrictions is reversing migration flows from the early days of the pandemic, when remote work forced many people to afford larger homes in suburbs on city outskirts and more rural areas. Enabled.
Ontario, BC poised to be buyer’s market despite high interest rates, says RBC Housing report
“People thought this urban exodus was going to be permanent during COVID and that nobody would want to live in the city,” Pasalis says. “Well, that’s not happening. People are moving back toward the city. They want to be closer to downtown. So I suspect the market in the core will be a little busier.”
Nasma Ali, a broker and founder of OneGroup in Toronto, says that with borrowing costs at their highest point in years, cheap condos will be “desirable,” especially in expensive markets.
“For a first-time homebuyer who is in Toronto, the most affordable property class is a condo,” she says.
In Calgary, Lyle says the pressure for condos is already on. Three years ago, she says, the condo market was sitting on eight months’ worth of inventory, but heading into 2023, it’s already at two months’ worth.
“It’s the fastest growing market segment right now in terms of price and in terms of sales, it’s taking off and we haven’t seen that in a long time.”
Pre-construction buyers are showing ‘some distress’
Some experts warn that the pain of higher interest rates could be particularly heavy on the pre-construction market in 2023.
Ali says that for buyers who bought a home in 2020, when interest rates were low, the bar is too high to qualify for a mortgage after the Bank of Canada’s rapid rate increases in 2022. Some of these buyers locked in their purchases from high pandemic prices and have not benefited from the recent freeze, she notes, and are now forced to pay extreme prices at very high interest rates.
With those homes set to be completed in the coming year, these buyers will be forced into a tough situation, says Ali. She points out that some people may be forced to come up with extra money to cover a home they weren’t appraised for for the mortgage they needed, or they may be paying monthly on the property with today’s high rates. May not be able to pay the mortgage.
These buyers may have to hand over their sales if they can, or sell at a heavy loss, says Ali.
“If dominoes fall, it usually means we’re going to see multiple listings end up on the market,” she says.
Pasalis agrees that the pre-construction market looks weak in 2023.
Potential buyers may also get a deal if an investor is desperate to unload their pre-construction condo, he says.
“We’re starting to see some distress among pre-construction condo investors,” he says.
“There may be some opportunities as a buyer to get some value because this is the segment of the condo market where there’s a little bit more pressure.”
However, these units aren’t listed on traditional multiple listing services, so Pasalis says that anyone eager to own a unit as it is being completed will have to search a little more carefully or spend their freshman year. In hunting habitats one has to go straight to the source. ,
– With files from Global News’ Anne Gaviola and Rachel Gilmore
