Canada Housing Market Outlook 2023: Here’s What Buyers and Sellers Can Expect

After years of frenzy in Canadian housing market during that time COVID-19 pandemic, 2022 has seen a reversal in much of the industry as the Bank of Canada interest rate increase cooling down the residential real estate sector in coastal cities.

Most of the economists and experts who spoke to Global News said they expect the situation to cool further into 2023, citing excessively high mortgage rates, low inventory levels in the market market and uncertainty about where to sell. Bank of Canada interest rate cycles will eventually peak.

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But where will the decline in the Canadian housing sector bottom out? And will all markets and asset classes be equally affected?

Here are the housing market trends and trends to watch in 2023, according to industry experts.

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Where will the price bottom?

The latest data available from the Canadian Real Estate Association (CREA) shows that, on a seasonally adjusted basis, house prices in Canada are down 19% from their February-November peak, when sales the average is 636,838 USD.

When will the bottom come? RBC Assistant Chief Economist Robert Hogue said in a note on December 19 that he believes, given the pace of decline in both home prices and sales, there are “early signs that the correction is approaching its final stages.”

He said prices could eventually hit a low “in early 2023,” but warned that timing would vary between markets.

Hogue thinks this bottoming will coincide with the Bank of Canada stabilizing its key interest rate – the central bank signaled in December that may be nearing the end of its hiking cycle — and that for those looking to enter the market, this could be the most affordable place of the year for potential buyers.

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While spring may mark a low point in prices, Canadian brokers do not expect significant changes between 2022 and 2023.

Re/Max Canada said in housing outlook for 2023 that total house prices are expected to fall 3.3% on the year, while Royal LePage’s annual survey forecasts discount only one percent.

Chris Alexander, president of Re/Max Canada, told Global News in late November that the Bank of Canada’s interest rates are the “big card” that will decide when buyers and sellers are both comfortable with the trade. return to the market.

Click to play video: 'What will the housing market look like next year?'

What will the housing market look like next year?

Some housing markets may see price increases

Some Ontario cities are particularly vulnerable as, entering 2023, Re/Max projects, with rates expected to fall more sharply in the Greater Toronto Area (11.8 percent lower), Barrie (15% lower) and Durham (10% lower).

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Areas of British Columbia are also projected to decline, such as Greater Vancouver (down 5%), Kelowna (down 10%) and Nanaimo (also down 10%).

Re/Max Canada’s 2023 housing outlook shows prices rising in some markets and falling in others. Exact data for Montreal were not available at press time.

But some parts of the country are set to grow by 2023, Re/Max forecasts.

Re/Max expects prices to increase in cities including Halifax (up 8%), Calgary (up 7%), Ottawa and Kingston, Ont. (up four percent), St. John’s, NL (up four percent) and Saskatoon (up three percent).

Corinne Lyall, owner and broker of the Royal LePage Benchmark in Calgary, said one of the reasons the city is expected to do well in 2023 is because it hasn’t seen a price increase suddenly due to the pandemic as the markets in BC and Ontario did.

With Calgary growing only modestly during that time, it becomes a more affordable option for people who originally lived in more expensive provinces, who can now work anywhere and can afford bigger houses for less money, says Lyall.

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The benchmark cost of a detached home in Calgary in November was $630,236, according to the local real estate board, almost a third of the $1.86 million price of a standard Vancouver detached home. .

“Our rates are a lot lower than in a big city,” says Lyall. “You can buy double the house here.”

Lyall added: “Entering a period of economic uncertainty, the Alberta market is also supported by recent strength in the oil and gas sector. She believes that the foundation of the traditional energy industry, fueled by Calgary’s efforts to diversify as a technology hub in recent years, makes the city an attractive prospect for Canadians who want to resettle.

“I think people are still seeing this as a place of opportunity,” she said.

Condominiums, urban centers are expected to keep good prices

According to experts who spoke with Global News, another part of the Canadian market likely to hold in 2023 is apartments and real estate in urban centers.

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John Pasalis, president of Realosophy Realty in Toronto, says that, like Calgary, downtown apartments and real estate have not suffered from massive price inflation during the pandemic, and will therefore fall even further. when the market cools down.

In addition, the return to the office amid the lifting of COVID-19 restrictions is reversing the migration flow from the early days of the pandemic, when remote work allowed more people to buy homes. greater in suburban residential areas on the outskirts of cities and in more rural areas.

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“People think this urban exodus during COVID is going to be long and no one wants to live downtown,” says Pasalis. “Well, that’s not going to happen. People are moving back to the city. They want to be closer to the city center. So I suspect that the core market will be a bit busier.”

Nasma Ali, Toronto-based broker and founder of OneGroup, says that with borrowing costs at their highest levels in years, cheaper apartments will be especially “desirable” in expensive markets.

“For first-time homebuyers in Toronto, the most affordable asset class is an apartment,” she said.

In Calgary, Lyall says the apartment push has already begun. Three years ago, she said, the apartment market had an eight-month inventory, but by 2023, that inventory has dropped to two months.

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“It’s the fastest growing market segment in terms of price and in terms of sales, it’s leading the way and we haven’t seen that in a long time.”

Click to play video: 'Need to return to downtown Calgary apartments'

Demand returns for condos in downtown Calgary

Pre-construction buyers show ‘some suffering’

Some experts warn that the impact of higher interest rates could weigh heavily on the pre-construction market in 2023.

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Ali said that for buyers who put down a mortgage in 2020, when interest rates are low, qualifying for a mortgage will be much higher after the Bank of Canada’s rapid rate hike in 2022. Some of these buyers have closed their purchases at She noted that pandemic prices are high and have not benefited from the recent cooling off, and are now forced to pay top prices with much higher interest rates.

With homes nearing completion within the next year, these buyers will be put in a pinch, Ali said. Some people may be forced to earn extra money to pay for a home that isn’t appraised for the mortgage they need, or they may not be able to afford the monthly mortgage payment, she explains. real estate with higher interest rates than today.

Ali said these buyers may have to specify a sell if they can or sell at a heavy loss.

“If the domino falls, this usually means we end up seeing more listings hit the market,” she said.

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Pasalis agrees that the pre-construction market looks vulnerable in 2023.

Potential buyers can even find a deal, he said, if an investor wants to demolish their pre-construction apartment.

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“We are starting to see some anxiety among pre-construction condo investors,” he said.

“There could be some opportunity as a buyer to get some value in because that is the segment of the condo market where there is a bit more pressure.”

These units aren’t listed on traditional multi-listing services, though, so Pasalis says anyone looking to buy a unit when it’s nearing completion will have to search a little more carefully or direct access to the source in their New Year’s housing hunt. .

— with files from Global News’ Anne Gaviola and Rachel Gilmore

Click to play video: 'Housing market 'unsustainably hot' during pandemic, but now 'vulnerable point': Macklem

Housing market ‘unsustainably hot’ during pandemic, but now ‘vulnerability’: Macklem


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