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Average residential prices to decrease by 3.3% in 2023: Re/Max

Amid rising interest rates and recession worries, Re/Max Canada is anticipating a modest decline of 3.3 per cent in average residential sales prices across the country in 2023. 

The company is releasing its 2023 Canadian Housing Market Outlook Report, which includes estimates based on surveys of Re/Max brokers and agents across the country.

In contrast to 2022, most regions analyzed in the report will experience more balanced conditions in 2023 – a trend that’s already starting to materialize due to the current economic conditions.

“It’s good to see the majority of markets moving toward more balanced conditions, which is typically defined by 45 to 90 days on market. This is a much-needed adjustment from the unsustainable price increases and demand we saw early in 2022,” says Christopher Alexander, president of Re/Max Canada. 

According to a Leger survey commissioned by Re/Max as part of the report, 73 per cent of Canadians view homeownership as the best long-term investment they can make. Yet, 67 per cent, are feeling less optimistic in the short-term, with the same numbers of Canadians less inclined to buy in the first half of 2023 and 62 per cent less willing to sell in that time frame.  

“As we head into the new year, it’s important that governments work collaboratively to support housing affordability and address the supply challenges that Canadians continue to face in order to make homeownership feasible for those who want it,” Alexander says. 

“We’re confident that as economic conditions improve and the market continues to even out into Q3/Q4 2023, a more-regular pace of activity will resume,” says Elton Ash, executive vice president of Re/Max Canada.

 

Regional overview

 

Based on the insights of Re/Max brokers and agents in Canada, 60 per cent of housing markets in Canada are expected to be balanced markets in 2023, impacted by modest price declines and less activity.  

With the exception of Halifax, Ottawa and Montreal, balanced market conditions are expected in Canada’s major city centres, according to the outlook.

 

Greater Toronto Area

 

The Greater Toronto Area is currently a balanced market – a condition that is anticipated to continue into 2023, according to Re/Max. Move-up and move-over buyers have been driving demand in the region in 2022, a trend that is expected to continue next year. Meanwhile, single-detached homes remain the dominant housing type, followed by condos. The luxury market in Toronto has slowed down and will likely continue to cool in 2023 due to economic pressures. Meanwhile, new construction projects are being delayed due to the widening gap between market prices and construction costs, including the impact that higher interest rates have had on financing these projects. 

The average residential sale price in the GTA may decrease by up to 11.8 per cent in 2023.

 

Greater Vancouver Area

 

Balanced market conditions in the GVA are anticipated to continue into at least the second quarter of 2023. Move-up and move-over buyers have led consumer demand in the region, with first-time buyers following close behind – a trend that’s likely to persist into the beginning of next year.  

Single-detached homes remain the dominant housing type in the area, with the “upsizing” trend expected to become increasingly popular among families in 2023. Desirable neighbourhoods in the city are currently based on location, with access to rapid transit playing a large part in purchasing decisions. A continued drop in condo pricing is expected into 2023, while the luxury market is anticipated to have a slow start to the year before balancing out in the latter half of 2023. 

The average residential sale price in the Greater Vancouver Area is anticipated to decrease by five per cent in 2023. 

Much like Vancouver, Calgary’s marked is balanced, but is expected to shift into seller’s territory in early 2023. First-time buyers are driving demand in the region, with move-up and move-over buyers trailing close behind – a trend that is expected to continue into 2023. 

 

Calgary

 

Like Vancouver, Calgary’s market is balanced but expected to shift into seller’s territory in early 2023. First-time buyers are driving demand in the region, with move-up and move-over buyers trailing close behind – a trend that is expected to continue into 2023. 

The average residential sale price increased by 13 per cent from $585,025 in 2021 (January-December) to $658,277 in 2022 (January-October). Condos are currently the dominant housing type in the region, with single-detached homes expected to drive the majority of sales in 2023, as buyers seek additional living space. Inventory is anticipated to remain low in the first quarter of the year before steadily increasing through the third quarter and finally sloping down again in the final quarter of 2023.  

Home sales are steadily increasing and are expected to continue in 2023. The luxury market has decreased its pace but is likely to pick back up next year. 

The average residential sale price in Calgary is anticipated to increase by seven per cent in 2023. 

 

Edmonton

 

Like most regions across the country, Edmonton is currently experiencing a balanced market, with demand expected to increase in the spring. Move-up and move-over buyers are driving demand in the region and are expected to continue doing so into 2023. The average residential sale  

price increased by three per cent from $387,614 in 2021 (January-December) to $401,025 in 2022 (January-October). Single-detached homes remain the dominant housing type.  

Demand for downtown condos is expected to continue rising in 2023, with demand in the luxury segment becoming more robust in the year ahead. 

The average residential sale price in Edmonton is anticipated to increase by three per cent in 2023. 

 

Regina

 

Regina is considered a balanced market and is anticipated to remain one in 2023. Move-up and move-over buyers have driven demand in the region and are expected to continue doing so into 2023. The average residential sale price decreased by one per cent from $324,650 in 2021 (January December) to $320,970 in 2022 (January-October). Single-detached homes remain the dominant housing type in the region.  

Rising interest rates will likely be a dominant theme in 2023, resulting in a slower market for buyers and sellers. 

Regina’s average residential sale price is anticipated to remain the same in 2023. 

 

Winnipeg

 

Winnipeg is currently sitting in a balanced market but is expected to shift to a buyer’s market early in the year before returning to balance in late 2023. Move-up and move-over buyers continue to drive demand in the region, with single-detached homes remaining the dominant housing type – trends that are expected to intensify in 2023. The average residential sale price increased by 10 per cent from $386,491 in 2021 (January-December) to $423,680 in 2022 (January-October). 

Rising interest rates are expected to continue placing pressure on affordability and pre-approval amounts in Winnipeg next year. Unlike most regions, Winnipeg is experiencing an increase in joint and multi-generational family ownership – which can be attributed to ongoing affordability challenges. The condo market is in line with the changes experienced in the overall market. 

Winnipeg’s average residential sale price is expected to decrease by 8.5 per cent in 2023. 

 

Ottawa

 

Ottawa is currently defined as a seller’s market, and it is anticipated to remain one into Q3 of 2023, where subsequently, it is expected to become balanced. First-time homebuyers are driving demand in the region due to its relative affordability, a trend likely to carry on next year. The average residential sale price increased by nine per cent from $601,039 in 2021 (January-December) to $656,761 in 2022 (January-October). Townhomes are currently the most in-demand housing-type due to the accessible entry point they provide buyers.  

As single-family dwellings have become unaffordable to rent, multi-residential properties and tiny or coach home conversions are expected to increase. Rising interest rates are anticipated to continue cooling the market next year. Supply remains an issue in Ottawa, with many new construction developments being halted due to increased development fees and material and labour shortages. 

The average residential sale price in Ottawa is anticipated to increase by four per cent in 2023. 

 

Montreal

 

The Montreal Region is currently a seller’s market, but certain properties and areas will go toward a balanced market. These conditions are anticipated to continue into 2023. Move-up and move-over buyers are currently driving demand in the region – a trend expected to carry over next year. The average residential sale price increased by 13 per cent year-over-year in Montreal (from $490,000 in 2021 (January-December) to $556,000 in 2022 (January-October). Single-detached homes are the most in-demand housing type in the Montreal region.

Rising interest rates are anticipated to continue impacting the housing market in 2023 – specifically by reducing its pace. Supply chain, labour shortages and rising materials and labour costs have caused new construction developments to become delayed. The luxury market is expected to cool in 2023, creating more advantageous opportunities for potential buyers. 

The average residential sale price in the Montreal Region is anticipated to decrease by five per cent in 2023. 

 

Halifax

 

Halifax is currently a seller’s market and is anticipated to remain one in 2023. Move-up and move-over buyers are driving demand in the region and are expected to continue to do so next year. The city saw a 19 per cent increase in year-over-year residential sale prices from $457,741 in 2021 (January December) to $542,663 in 2022 (January-October). 

Single-detached homes remain the most in-demand housing type among buyers. Interest rates rising and inter-provincial migration reducing post-pandemic contributed to the number of sales in the region decreasing by 25 per cent year-over-year, from 6,588 in 2021 (January-December) to 4,912 in 2022 (January-October).  

Supply is anticipated to remain tight in 2023 for Halifax, as buyer demand remains high and the city prepares to welcome a wave of new Canadians. Renting rooms and sharing expenses are ways first-time homebuyers are entering the market in Halifax. The luxury market has experienced additional activity and a recent rise in prices, but overall, this segment is expected to cool in 2023.  

Halifax’s average residential sale price is anticipated to increase by eight per cent in 2023.

 

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