Housing Market Predictions for 2023
In the years just before and during the pandemic, we saw an incredible rise in home prices across Ontario, particularly in the GTA. In 2022, however, there was a huge correction in the housing market. This has led many to ask how much further home prices might fall.
According to the Canadian Real Estate Association (CREA), the benchmark house price in Ontario peaked in March 2022 at $1.08 million. That represents a 64% increase since the start of the pandemic. Since then, however, prices in Ontario have fallen by almost 20%, taking them back to the same level they were in September 2021.
And currently, the number of homes bought and sold throughout the province is lower per capita than in the mid-90s; many are asking when the market might start to heat up again.
Here are a few predictions on what is likely to occur in the Ontario housing market for the remainder of 2023:
The correction is likely to end in the second half of the year
Most real estate analysts predict home prices in Ontario to continue declining at a much slower pace before reaching a bottom by the third quarter of the year.
This is because there have been some indications that the significant interest rate hikes from the Bank of Canada (BoC) are behind us. To curb inflation, the BoC hiked interest rates seven times alone in 2022, making mortgages more expensive for Canadians and cooling the housing market.
How is supply being affected?
According to the Canada Mortgage and Housing Corporation (CMHC), condo projects – particularly in the GTA could run into some warm waters. With rising construction costs and higher interest rates, there could be delays and even cancellations of projects.
The CMHC is also warning that the pace of new home construction is also slowing.
The forecast for supply is mixed in terms of already existing homes and condos. Homeowners are becoming reluctant to sell as they see the prices of homes falling. On the other hand, investors may be forced to sell as mortgages come up for renewal at increased interest rates.
Falling home prices combined with higher interest rates will mean that even though homes will generally be more affordable, mortgages will be less affordable and therefore cancel each other out in terms of overall affordability.
Given all the above factors, the volume of listings is expected to stay the same over the year.
When will the housing market rebound?
According to many economists, Ontario’s housing market will likely rebound in 2024. Although rising interest rates may force some homeowners to put their homes on the market, lower prices than we have seen in recent years will make them reluctant.
Do you need a real estate lawyer?
If you buy or sell a home, working with a real estate lawyer is always recommended to protect you. Contact us today to speak to a lawyer if you are considering entering a real estate transaction.
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