Real Estate Housing forecasts for 2023
info from Steve Huebl is a graduate of Ryerson University's School of Journalism and has been with Canadian Mortgage Trends
Rising interest rates in 2022 drove home sales and prices lower, though price declines have so far been somewhat modest compared to the run-up in prices in recent years.
But what does 2023 hold in store? Below, we’ve compiled an assortment of forecasts, with some predictions for relatively flat-lined growth, while others see further declines on the horizon.
Looking at 2022, projected figures suggest home sales will end the year at 532,545, a 20% decline compared to 2021, according to the Canadian Real Estate Association. Home prices, meanwhile, are forecast to end the year up 4.7% to an annual average of $720,255.
Tight supply has been a recurring theme, with CREA noting the months of inventory measure remains historically low, despite improvements in recent months.
“In terms of monthly new supply, the bigger picture is listings are not flooding the market,” CREA noted. With the exception of 2019, November 2022 saw the fewest new listings for that month in 17 years.
While home price growth is expected to moderate in 2023, recent data show Canadians continue to hold a positive view toward real estate.
“Canadians are understandably hesitant to engage in the market early in 2023,” said Re/Max Canada President Christopher Alexander. “Despite this, more Canadians see real estate as a solid long-term investment when compared to this time last year.”
Real Estate Market
- 2023 home sales forecast: 520,156 (-2.3% year-over-year)
- 2023 home price forecast: $721,814 (+0.2%)
- Commentary: “With interest rates rising, home sales have continued to cool. In some parts of the country, home prices have fallen from their peaks earlier this year, are flat in some regions, and are still climbing in others. The issue of not enough homes for sale has not gone away.”
- 2023 house price forecast by Q4: -1% year-over-year
- Commentary: “Comparing prices to the previous year, the first quarter of 2023 should show the deepest decline in home values,” said Phil Soper, president, and CEO of Royal LePage. “At that time, we will be comparing 2022’s final weeks of pandemic housing market excess – when home prices reached historically high levels – to a much quieter market, where values have had a full year to moderate. We expect year-over-year comparisons to show progressively less price decline as the year goes on, with small week-to-week improvements in the third and fourth quarters, allowing Canadian home values to end 2023 essentially flat to where we are today.”
- 2022 house price forecast: -3.3% year-over-year
- Commentary: “We expect that market activity will return to a more-regular pace, as economic conditions stabilize toward the second half of 2023,” said Elton Ash, Executive Vice-President of Re/Max Canada.
- 2023 house price forecast: -10.7%
- Commentary: “Weaker sales activity should push prices even lower in the near term. However, our forecast calls for average prices to only partially retrace their pre-pandemic gain when they eventually bottom. An unanticipated surge in resale supply would undermine this view, but so far the rate at which new listings are hitting the market has been subdued.”
- Link (data)
- Link (commentary)
- 2022 house price forecast: -8.5%
- Commentary: “The market correction’s silver lining is it’s setting the stage for some affordability improvement in the year ahead. We expect the national benchmark price to fall 14% from its early 2022 peak, providing significant scope to lower ownership costs once interest rates stabilize. We think that could start in the early part of 2023—though the timing is poised to vary by market. Growing household income will partly drive the improvement process. It will likely take years to fully reverse the tremendous deterioration that took place since 2021.”
- Link (data)
- Link (commentary)
- 2023 house price forecast: -5% to -7%
- Commentary: “High mortgage rates reduce affordability and lead to lower demand, pressuring prices, although housing supply limitations may curb price declines…Home price softening will be most severe for Canada, whose anticipated peak-to-trough decline of 15%, as measured by the mid-point of our forecast ranges, is among the steepest of the markets profiled.”