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“Where is the Canadian Housing Market Headed in 2023? Our Bold Predictions”

Posted by Editor on June 19, 2023
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The Canadian housing market has been a hot topic in recent years, but where is it headed in 2023? Our bold predictions show a bright future for the housing market, with a steady increase in prices, a rise in demand, and increased development of new homes. In 2023, Canadians can look forward to a strong housing market that will provide them with a safe and secure investment.

Many hailed the Bank of Canada’s decision to hold off on interest rate increases in March and April of this year as a development that could restore homebuyers’ confidence and provide some level of certainty about the direction of the housing market.

Since March 2022, the central bank had aggressively raised interest rates to combat sky-high inflation and an overheated economy, but it made clear in its second and third rate decisions of the year that it would be willing to hold rates steady if expected economic trends continued to materialize.

With prospective buyers starting their search again, sales and prices arguably increased as a result of their optimism, which may have contributed to a flimsy housing market revival. New Canadian Real Estate Association (CREA) statistics show that sales increased once more in May, making this the fourth month in a row that activity has increased.

The MLS Home Price Index jumped by 2.1 percent over April and registered its first yearly increase in nearly two years, according to the association, which reported a 5.1 percent increase in national home sales on a month-over-month basis.

How might the market be impacted in the coming months given that the increase in sales and activity occurred just before the Bank of Canada’s most recent rate hike, which was unexpected in some quarters?

Leah Zlatkin, chief operating officer of Mortgage Outlet and a broker, told Canadian Mortgage Professional that two weeks prior to the Bank’s most recent decision, she would have predicted a “red-hot market,” with prices continuing to rise and activity ramping up, but that the outlook is now less certain as a result of the rate hike.

 

In response to the Bank decision, she said, “We saw people starting to list homes and actually sell for better value than we had seen in the last few months.”. “Prices have risen again, though not quite to [their] COVID level,” according to this. ”.

 

How do sellers feel about the market right now?

Many homeowners who may have been on the fence about selling may have decided that now is a good time to list their property after noticing how the market has been trending lately, according to Zlatkin. However, demand levels may be affected negatively by rising interest rates, especially with more increases likely to come.

“For people who don’t yet have a pre-approval, or for people who would be buying or closing outside of that pre-approval window, the desire to buy a home may be less so now because they worry about changes in interest rates and they worry about what will happen in the future,” Zlatkin said.

Therefore, if a person has a tendency to worry a little bit, they may decide to wait it out by continuing to watch from the sidelines. And that might sufficiently reduce demand; if demand abruptly drops off, that could result in serious issues. ”.

According to Zlatkin, borrowers who are having trouble qualifying in the current environment are frequently forced to select five-year fixed products, despite the fact that they are occasionally not the best choices. This presents two challenges: first, “Where are rates going to go, and how comfortable do I feel in this environment?”.

Second, many borrowers who had a specific budget to purchase are now seeing that reduced as a result of rates continuing to rise. “Does it still make sense, and can we still get the house we want for that, because rates keep going up and now I qualify for less?”.

 

Could a lack of supply still be a problem for Canada’s housing market in 2023?

The housing supply, which “remains quite low,” will be a major factor in determining sales and price activity for the remainder of 2023, CREA’s chair Larry Cerqua stated in remarks that were presented with the May sales figures.

In the meantime, according to its senior economist Shaun Cathcart, “this housing demand rebound may play out more acutely than might have been anticipated on the price side this year if existing owners don’t start to supply the market with new listings.”. ”.

While the number of months of inventory on a national basis continued to trend downward, having dropped by more than one whole month since the end of January, new listings remain around historic lows despite rising by 6.8 percent in May compared to the prior month.

In conclusion, our bold predictions for the Canadian housing market in 2023 are optimistic. Despite the challenges faced by the market in recent years, including the impact of the pandemic, we believe that the market will rebound and continue to grow over the next few years. Factors such as low interest rates, government support for affordable housing, and a growing population will all contribute to a positive outlook for the market. Additionally, we predict that certain regions, such as Toronto and Vancouver, will continue to see strong demand and price growth. While there may be some short-term fluctuations, we believe that the Canadian housing market is poised for long-term success. As always, it is important for buyers and sellers to stay informed and work with experienced professionals to navigate the market. With the right strategies and a positive outlook, we believe that the Canadian housing market will continue to thrive in the years to come.

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