The average price of properties will fall in 2023… before rising again

2023-04-15 00:58:31

The Canadian Real Estate Association (CREA) expects the average home price to end the year down 4.8% from 2022, but expects prices to rise roughly equivalent in 2024.

These forecasts, published on Friday, evoke an average price of $670,389 this year and $702,214 next year, with prices then expected to increase by 4.7%.

The association also expects home sales to decline 1.1% to 492,674 this year, before rising 13.9% to 561,090 in 2024.

This forecast takes into account the small month-to-month sales change seen since the summer of 2022 and modest monthly gains in February and March as buyers warmed to the prospect of making a purchase. .

“As the spring market heats up and it looks like some buyers are re-entering the market, it is important to remember that the intense market conditions of the past few years have not gone away, they have simply been put on hold” , explained Jill Oudil, president of the ACI, in a press release.

The market Canadians return to has seen months of declining sales, dwindling listings and waning buyer enthusiasm, as the Bank of Canada’s eight successive interest rate hikes weighed on the cost of borrowing.

But the central bank has held its benchmark rate steady in recent months, which has convinced some potential buyers to jump back into the market while prices are still low.

These trends led to a 34.4% drop in March home sales from a year earlier, to 41,636.

In seasonally adjusted data, sales amounted to 33,833, regarding 1% more than in February.

Sales on the rise

March is the second consecutive month of rising sales, said Rishi Sondhi of TD Economics.

Sondhi attributed much of the rise to stabilizing interest rates, which supported “buyer psychology,” and the strength of the labor market.

“Our forecast is for sales to continue to rise this year, although impending regulatory changes, which will make it harder to get a mortgage, pose a significant downside risk,” he said in a statement. note to investors.

While sales have increased month over month, new listings remain at their lowest level in 20 years, according to ACI.

Seasonally adjusted, new listings totaled 53,298 in March, down 5.8% from February. The actual number of new registrations reached 68,597, down 27.4% from the same month a year earlier.

With supply having reached a historic low, M^me Oudil said homes were not only selling faster, but that wasn’t enough to entice some sellers to put their property up for sale.

“Sellers will likely need to see more evidence of sustained recovery in activity and prices before listings increase significantly,” Sondhi said.

The average home price was $686,371 in March, down 13.7% year on year.

Excluding the Toronto and Vancouver areas, which tend to be the most active markets in the country, from the calculation, the national average price is reduced by more than $136,000.

Seasonally adjusted, the average home price rose 2% from February to $648,088.

ACI also reported that the average price was up nearly $75,000 from its January 2023 level.

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