In the wake of Canada’s highest interest rates in decades, Re/Max Canada has revealed in its 2023 Fall Housing Market Outlook Report that brokers and agents are expecting a softer housing market this autumn.
As the nation grapples with rising interest rates and a shortage of housing inventory, the report highlights that the national average residential sale price is projected to remain stagnant, with no significant changes expected for the rest of the year.
Christopher Alexander, president of Re/Max Canada, commented on the findings, saying, “If the fall market is an early indicator for 2024 activity, we may see a very active first quarter as buyers and sellers take advantage of easing prices into the earlier part of next year.”
Millennial and Gen Z homebuyers are feeling the squeeze
The lack of affordable housing inventory is leading to 55 per cent of Gen Zs and 49 per cent of Millennials altering their housing plans, according to a Leger survey commissioned by Re/Max Canada.
The interest rate environment remains a prominent concern for Canadians; the survey revealed that 33 per cent of Canadians interested in buying or selling a home in the next 12 months are adopting a wait-and-see approach regarding interest rate changes.
In contrast, over half of Canadians (51 per cent) believe that further interest rate increases this year will not impact their financial situation or affect their plans to buy or sell a home. Younger Canadians, including 47 per cent of Gen Zs and 52 per cent of Millennials, are more inclined to rely on BoC interest rate announcements to determine the optimal timing for their real estate transactions.
“While we wait for governments to implement a tangible national housing strategy to boost Canada’s supply of both affordable and diverse housing, the market is starting to ease in some regions. This is bringing some much-needed relief from the sky-high prices we’ve experienced over the past couple of years,” added Alexander.
Elton Ash, executive vice president of Re/Max Canada, emphasized the importance of addressing the housing supply shortage, stating, “The Canadian housing market has historically given homeowners great returns and solid financial security. We believe in the long-term health of Canada’s housing market, but in order to protect it, we need to acknowledge and address the housing supply shortage in every city, town, and neighbourhood across the country.”
As part of the 2023 Fall Housing Market Outlook Report, data reveals that 74.1 per cent of Re/Max broker regions surveyed observed a decrease in the number of listings ranging from 1.2 to 40 per cent between January and July year-over-year.
Additionally, sales transactions in all regions surveyed as part of the report experienced declines, ranging from a decrease of 4.1 per cent to upwards of 39.6 per cent compared to the same period last year.
Regional market insights
Based on brokers’ and agents’ insights, 44 per cent of housing markets in Canada are expected to be sellers’ markets in 2023, while the rest are anticipated to be a mix.
Western Canada and the Prairies: In contrast to other regions, Western Canada and the Prairies anticipate average residential sale prices to increase this fall by 0.7 to 4.5 per cent in regions such as Calgary, Edmonton, Winnipeg, Man., and Red Deer, Alta. However, regions such as Metro Vancouver and Kelowna, B.C., are expecting sales to soften by two to three per cent.
The mix of outlooks also reflects the estimated market type heading into the fall, with most regions reporting a mix of sellers/balanced depending on the price point, property type, and location in the specific region.
Ontario: Ontario’s housing market presents a diverse mix of average residential sale price estimates for the fall. While seven regions expect decreases, regions like the GTA, Lakelands West and Sudbury anticipate an increase in average residential sale prices this autumn.
In Ontario, 53 per cent of markets are likely to be sellers’ markets this fall, while 40 per cent are anticipated to be balanced, and seven per cent are expected to be buyers’ markets.
Quebec: The island of Montreal experienced a decrease in prices by 5.8 per cent between January and June 2022 and 2023, along with an 18.2 per cent decrease in the number of sales. However, the region saw a 63.7 per cent increase in the number of listings, primarily of renovated and well-priced homes. Sellers’ mortgages and cash transactions have become a new trend among high-end buyers.
Re/Max brokers reported an increase in these practices as a way for buyers to combat rising interest rates and mortgage payments.
Atlantic Canada: In line with the national trend, Atlantic Canada reports low inventory coupled with rising interest rates, particularly affecting buyers with lower price points and first-time homebuyers. Average residential prices are expected to decline in some areas and remain flat in others, with most markets in Atlantic Canada considered sellers’ markets apart from the Charlottetown area, PEI, which is considered balanced.
