Over the course of the next 12 months, the Royal LePage Market Survey Forecast, says to expect a modest decline of 1% in the aggregate price of a home in Canada to $765,171. .The forecast says to expect the median price of a single family home to decrease 2% to $781,256 and the condominium median price to decline 1% to $568,933 by the end of 2023. .“After nearly two years of record price appreciation, fueled by a steep climb in household savings, very low borrowing costs and an overwhelming desire for more space during the COVID-19 pandemic, the frenzied housing market overshot and the inevitable downward slide or market correction began, intensified by rapidly rising borrowing rates,” says Phil Soper, president and CEO, Royal LePage..“In an era characterized by the unusual, this correction has not followed historical patterns. While the volume of homes trading hands has dropped steeply, home prices have held on, with relatively modest declines. We see this as a continuing trend.” .There are a number of factors supporting home prices in the current environment, says Soper. .“The supply of homes for sale must exceed demand in order for prices to drop materially. Canada is struggling with an acute, long-term housing supply shortage,” he says. “Organic demand is supported by the current lifecycle of our large millennial demographic and a record number of new immigrants who need to be housed.” .“Smaller household sizes mean more housing units are needed per capita than in the past. Pent-up demand is growing from buyers who have the ability to transact but have chosen not to in these turbulent times.” .Soper says other influencing factors include today’s low unemployment environment, with a large buffer of unfilled job vacancies, meaning few families are likely to need to sell their homes for financial reasons. Homes are also modestly cheaper than at the height of the pandemic boom, offsetting some of the impact of rising rates and household savings remain above long-term norms, making it easier to overcome down payment hurdles. .“Traditional wisdom says that a recession triggers widespread job losses and missed mortgage payments,” says Soper..“People are forced to sell or the bank forecloses and lists the property, flooding the market with new listings when demand is weak. In this post-pandemic period, people have kept their jobs. In fact, they have seen wages and salaries rise.” .“We have a tightly managed national mortgage portfolio, with historically low default rates, supported by homeowners who have been required to qualify for a loan under the strict federal stress test for the last five years. And, we can’t forget that Canada has been grappling with an acute shortage of homes overall. We simply don’t see the factors at play that would result in a large drop in home values.” .The Royal LePage forecast includes modest price gains in the third and fourth quarters of 2023, after an aggregate price decline, year over year, of 12% in the first quarter of 2023, with a 7.5% decline, year over year in the second quarter of next year. .The recovery will be different in each market, dependent on the rate of price growth during the pandemic real estate boom..Due to their relative affordability, cities such as Calgary, Edmonton and Halifax are expected to record modest price gains in 2023, as they continue to attract out-of-province buyers, especially first-time homebuyers from southern Ontario and British Columbia looking for more affordable housing. .“While home prices have come down from the record highs recorded in the first half of this year, they remain well above pre-pandemic levels,” says Soper. “The projected aggregate price of a home in Canada in the fourth quarter of 2023 is expected to sit 15% above the fourth quarter of 2020, and 18.4% above the fourth quarter of 2019.” .Without a significant increase in housing supply, a return of buyers to the market, some driven by very high rental rates, should start to put upward pressure on prices again. And, in a tight-inventory market, sellers will remain hesitant to list their properties if they are unable to find a move-up home to purchase. .“It’s important to note that many would-be buyers currently sitting on the sidelines have not been forced to exit the market.".“While some of these families have been priced out for now by rising borrowing rates, we believe some have voluntarily adopted a wait-and-see attitude, not wanting to buy a property today that may be worth less tomorrow,” says Soper. “Yet people in their thirties, forties and fifties have known only a Canada where home prices rise faster than incomes.”.“When interest rates appear to have stabilized, these buyers may jump back into the market, anticipating a return to escalating home values.”
Over the course of the next 12 months, the Royal LePage Market Survey Forecast, says to expect a modest decline of 1% in the aggregate price of a home in Canada to $765,171. .The forecast says to expect the median price of a single family home to decrease 2% to $781,256 and the condominium median price to decline 1% to $568,933 by the end of 2023. .“After nearly two years of record price appreciation, fueled by a steep climb in household savings, very low borrowing costs and an overwhelming desire for more space during the COVID-19 pandemic, the frenzied housing market overshot and the inevitable downward slide or market correction began, intensified by rapidly rising borrowing rates,” says Phil Soper, president and CEO, Royal LePage..“In an era characterized by the unusual, this correction has not followed historical patterns. While the volume of homes trading hands has dropped steeply, home prices have held on, with relatively modest declines. We see this as a continuing trend.” .There are a number of factors supporting home prices in the current environment, says Soper. .“The supply of homes for sale must exceed demand in order for prices to drop materially. Canada is struggling with an acute, long-term housing supply shortage,” he says. “Organic demand is supported by the current lifecycle of our large millennial demographic and a record number of new immigrants who need to be housed.” .“Smaller household sizes mean more housing units are needed per capita than in the past. Pent-up demand is growing from buyers who have the ability to transact but have chosen not to in these turbulent times.” .Soper says other influencing factors include today’s low unemployment environment, with a large buffer of unfilled job vacancies, meaning few families are likely to need to sell their homes for financial reasons. Homes are also modestly cheaper than at the height of the pandemic boom, offsetting some of the impact of rising rates and household savings remain above long-term norms, making it easier to overcome down payment hurdles. .“Traditional wisdom says that a recession triggers widespread job losses and missed mortgage payments,” says Soper..“People are forced to sell or the bank forecloses and lists the property, flooding the market with new listings when demand is weak. In this post-pandemic period, people have kept their jobs. In fact, they have seen wages and salaries rise.” .“We have a tightly managed national mortgage portfolio, with historically low default rates, supported by homeowners who have been required to qualify for a loan under the strict federal stress test for the last five years. And, we can’t forget that Canada has been grappling with an acute shortage of homes overall. We simply don’t see the factors at play that would result in a large drop in home values.” .The Royal LePage forecast includes modest price gains in the third and fourth quarters of 2023, after an aggregate price decline, year over year, of 12% in the first quarter of 2023, with a 7.5% decline, year over year in the second quarter of next year. .The recovery will be different in each market, dependent on the rate of price growth during the pandemic real estate boom..Due to their relative affordability, cities such as Calgary, Edmonton and Halifax are expected to record modest price gains in 2023, as they continue to attract out-of-province buyers, especially first-time homebuyers from southern Ontario and British Columbia looking for more affordable housing. .“While home prices have come down from the record highs recorded in the first half of this year, they remain well above pre-pandemic levels,” says Soper. “The projected aggregate price of a home in Canada in the fourth quarter of 2023 is expected to sit 15% above the fourth quarter of 2020, and 18.4% above the fourth quarter of 2019.” .Without a significant increase in housing supply, a return of buyers to the market, some driven by very high rental rates, should start to put upward pressure on prices again. And, in a tight-inventory market, sellers will remain hesitant to list their properties if they are unable to find a move-up home to purchase. .“It’s important to note that many would-be buyers currently sitting on the sidelines have not been forced to exit the market.".“While some of these families have been priced out for now by rising borrowing rates, we believe some have voluntarily adopted a wait-and-see attitude, not wanting to buy a property today that may be worth less tomorrow,” says Soper. “Yet people in their thirties, forties and fifties have known only a Canada where home prices rise faster than incomes.”.“When interest rates appear to have stabilized, these buyers may jump back into the market, anticipating a return to escalating home values.”
