The spring market is off to a healthy start. Buyer activity picked up earlier than was anticipated in the first quarter of 2023, pushing home prices up over the final quarter of last year. As a result, home prices in Canada are expected to continue climbing, albeit at a much slower rate than the last two years.
Royal LePage is forecasting that the aggregate price of a home in Canada will increase 4.5% in the fourth quarter of 2023, compared to the same quarter last year. The previous forecast was revised upward to reflect an earlier-than-expected boost in activity in Canada’s major housing markets.
Following activity levels in the first quarter of 2023 that surpassed the Company’s expectations – a vigorous return of buyer demand coupled with ultra-low housing supply conditions – Royal LePage has adjusted its quarterly forecast for the remainder of the year. On a quarter-over-quarter basis, the national aggregate home price is expected to continue rising modestly but steadily over the next nine months.
“Coming out of a correction, it is common to underestimate the speed at which the market will turn itself around. As market activity is rebounding quicker than anticipated, we are looking ahead with a sense of cautious optimism,” said Phil Soper, president and CEO of Royal LePage. “While we do not expect huge price gains this year, some sense of normalcy is returning to the market.”
According to the Royal LePage House Price Survey released today, the aggregate price of a home in Canada decreased 9.2% year-over-year to $778,300 in the first quarter of 2023. On a quarter-over-quarter basis, however, the aggregate price of a home in Canada rose 2.8%, as buyers began to come off the sidelines following the Bank of Canada’s decision last month to pause interest rate hikes for the first time in a year.
“There has been nothing ‘typical’ about Canada’s housing market since the start of the COVID-19 pandemic. Lockdowns brought the housing market to a grinding halt in early 2020 before the work-from-home revolution catapulted it into a two-year, all-season frenzy of record sales volumes and aggressive price growth,” said Soper. “As markets do, this market overshot, and the inevitable correction was triggered when the Bank of Canada began to rapidly raise interest rates. The downturn came swiftly, and the real estate industry remained depressed for twelve months, a longer correction than the aftermath of the financial crisis thirteen years ago. We have turned the corner and the housing economy is growing again; none too soon for many buyers, who have been waiting patiently for prices to bottom out.”
Read Royal LePage’s first quarter release for national and regional insights.
First quarter press release highlights:
- Single-digit price gains in first quarter driven by early return of sidelined buyer demand and continued shortage of inventory
- Greater regions of Toronto, Montreal and Vancouver post quarterly aggregate price gains of 4.8%, 1.3% and 1.3%, respectively in the first quarter
- Royal LePage urges OSFI to heed the economic dangers that would accompany new, aggressive mortgage restrictions
Ottawa
The aggregate price of a home in Ottawa decreased 10.3 per cent year-over-year to $725,700 in the first quarter of 2023. On a quarterly basis, however, the aggregate price of a home in the region increased modestly by 0.8 per cent.
Broken out by housing type, the median price of a single-family detached home decreased 12.2 per cent year-over-year to $831,600 in the first quarter of 2023, while the median price of a condominium decreased 11.2 per cent to $384,000 during the same period.
“Real estate in Ottawa was quieter than normal in the first quarter but is tracking toward pre-pandemic levels as buyers return to the market. Still, inventory challenges could be a problem for buyers. The lack of supply will continue to put pressure on prices, and we’re already starting to see multiple offers again on well-priced properties. It’s simple low-supply, high-demand math,” said John Rogan, broker of record, Royal LePage Performance Realty. “Sellers remain in a ‘wait and see’ pattern, holding on to their homes in hopes that supply will increase, or leaving properties on the market at unrealistic price points. Last year was an unusual market. Sellers expecting 2022 prices in 2023 may need to re-evaluate.
“With enough buyer pressure, Ottawa’s real estate market should perform at typical levels this year, provided interest rates remain stable or increase only slightly from their current position.”
Rogan noted that Ottawa’s large civil servant population has a strong influence that could impact market activity, with strike talks underway between the feds and the country’s biggest public sector union.
Royal LePage is forecasting that the aggregate price of a home in Ottawa will increase 2.0 per cent in the fourth quarter of 2023, compared to the same quarter last year.
Source: https://blog.royallepage.ca/renewed-activity-in-canadas-real-estate-market-in-first-months-of-2023-prompt-upgraded-year-end-forecast/?
Source: https://www.royallepage.ca/en/realestate/news/canadas-real-estate-market-buyers-are-back-but-where-is-the-inventory/
