High inflation, rising interest rates, and overall economic uncertainty are driving factors in the expected decline of home sale prices this fall, according to a new report from Re/Max Canada.
The national average residential sale price in Canada is expected to drop 2.2 per cent in the final months of 2022, according to Re/Max Canada’s 2022 Fall Housing Market Outlook report. Out of the 30 markets analyzed, six are likely to experience a modest price appreciation, up to seven per cent.
In a survey of Re/Max brokers and agents, 22 out of 30 said rising interest rates have affected activity in their local residential market this year, with some indicating that this has been the most significant factor impacting homebuyer and seller confidence.
According to a new Leger survey commissioned by Re/Max Canada, 44 per cent of Canadians agree that rising rates are compelling them to hold on buying a property this fall, while 34 per cent say they won’t hold.
Christopher Alexander, president at Re/Max Canada, believes the housing supply shortages are still a significant issue country-wide. “…the current lull in the market is only temporary,” he says, “Until housing supply increases, these ‘boom’ and ‘bust’ cycles will likely be a recurring event.”
Elton Ash, executive vice president at Re/Max Canada, added, “Despite the fact that nearly half of Canadians are waiting to buy or sell a home, we’re confident that as economic conditions improve by mid-2023, activity will resume.”
Highlights from Re/Max’s regional fall housing market insights
Re/Max brokers and agents in Canada were asked to provide an analysis of their local markets this fall and share their estimated outlook for the remaining months of 2022.
Western Canada and the Prairies
- In regions such as Vancouver, Victoria, Kelowna, and Edmonton, brokers reported fewer multiple offers from buyers and a shift toward more balanced conditions between buyers and sellers.
- The average home price is expected to decline between zero and 6.5 per cent, with the exception of Calgary and Edmonton.
- Economic concerns have not had a notable effect on the market in Calgary, which according to agents, has been largely insulated due to its relative affordability. The region is anticipating a modest price increase of three per cent.
- In Edmonton, rising interest rates have impacted homes priced from $500,000 to $1,000,000, while those priced at $400,000 or less are still relatively affordable. Edmonton is likely to experience a modest price increase of 1.5 per cent.
- Demand for luxury properties in Vancouver and Edmonton remains stable.
- Low inventory remains a concern in Kelowna, Victoria, Vancouver, and Calgary and is expected to place upward pressure on home prices in 2023.
- Markets including Oakville, Windsor, Barrie, Durham, Kingston, and Kitchener-Waterloo anticipate a reduction in the number of units sold.
- Apart from Oakville and Muskoka, average home prices are likely to remain steady or decrease between two to 10 per cent.
- The luxury market has remained resilient and in demand among buyers in Oakville, contributing to the expected two per cent average price increase.
- Muskoka is expected to experience a five per cent increase in average residential sale prices.
- Peterborough is expected to see a seven per cent decrease in average residential sale prices.
- The return of conditional offers has been a prevalent trend across the province.
- Durham, London, Sudbury, Ottawa, the Lakelands, and GTA-Toronto are expected to regain balance in 2023, albeit with low inventory continuing to place upward pressure on prices.
- Thunder Bay is unlikely to experience any significant fluctuations this fall.
- Charlottetown, PEI experienced immediate impacts as interest rates rose, with the number of sale transactions reduced by almost half on a month-over-month basis, particularly among properties in the $500,000 to $1,000,000 price range.
- Most Atlantic Canada housing markets analyzed are expected to experience modest price increases through to the end of 2022, with the outlier being Charlottetown.
Read Re/Max’s 2022 Fall Housing Outlook Report here.