The Canadian Real Estate Association (CREA) has revised its forecast for the real estate market, predicting a notable downturn in both home sales and prices this year. The adjustment is attributed to weaknesses observed in Ontario and British Columbia.
Sales Projection Drop
In its latest quarterly forecast update, CREA anticipates a nearly 10% decrease in residential property transactions compared to 2022. The association now foresees approximately 449,614 residential property sales through Canadian MLS systems in 2023, representing a significant 9.8% decline from the previous year.
Decline in Average Home Prices
Simultaneously, CREA forecasts a 3.3% annual decline in the national average home price, projecting it to fall to $680,686 in 2023. This contrasts with expectations from July, which predicted a 6.8% decrease in sales and a mere 0.2% drop in average prices.
Market Insights from Toronto-based Realtor
Davelle Morrison, a realtor with Bosley Real Estate Ltd. in Toronto, emphasizes the impact of high-interest rates on market dynamics. According to Morrison, the current conditions present both challenges and opportunities for potential buyers.
Shift in Market Balance
The CREA report notes a recent increase in new listings since Labour Day. However, this surge in supply has not translated into a proportional rise in sales. The national sales-to-new listings ratio has dropped from nearly 70% to 50% within five months.
Analyst’s Perspective
BMO Capital Markets economist Robert Kavcic highlights the struggle in demand due to higher mortgage rates, causing a shift in market balance. Kavcic suggests that the downward pressure on prices may be evident in multiple markets.
Future Outlook and Risks
The CREA’s forecast acknowledges the uncertainty surrounding the Bank of Canada’s key interest rate. The association considers the possibility of no further rate hikes or, at most, one additional hike, with indications that the next move might be a rate cut.
September Home Sales and Prices
The forecast coincides with CREA’s report on September home sales, which showed a 1.9% increase compared to the same month in the previous year. On a month-over-month basis, however, sales in September declined by 1.9%.
The actual national average home price in September was $655,507, reflecting a 2.5% increase from September 2022.
Regional Variances and Opportunities
The report highlights regional variations, with Ontario experiencing a decline in the aggregate home price index. Davelle Morrison points out that this downward trend in Toronto has created opportunities for buyers, allowing them to consider properties that were previously unaffordable.
Author Introduction: Pritish Kumar Halder
Pritish Kumar Halder is a seasoned financial analyst with a keen interest in real estate trends. With a wealth of experience in market analysis, Pritish provides valuable insights into the dynamic landscape of the Canadian real estate market. His expertise is grounded in a comprehensive understanding of economic indicators and their impact on housing trends.
