Canada Fall Housing Market Forecast 2023: What The Months Ahead Have In Store For Buyers & Sellers

Canada's home market may experience a chill this fall as potential buyers and sellers wait to see where the Bank of Canada's interest rate path will go, fresh polls released on Tuesday revealed.

According to polls of the brokerage's agents, Re/Max Canada stated in a report that based on the state of the market, national home prices are anticipated to be steady from August until the end of the year.

This fall's housing market is predicted to be "softer" due to a shortage of available inventory in most housing markets and interest rates at their highest levels in more than 20 years, according to Re/Max's study.

Bank Of Canada's Impact On Fall Housing Market

Credit: Global News

Uncertainty about where the Bank of Canada's policy rate will go next ¡ª the central bank's next decision is scheduled for Wednesday ¡ª also guides many decisions among buyers and sellers, according to Re/Max polling.

The brokerage hired Leger to survey over 1,500 Canadians in July following the Bank of Canada's quarter-point rate hike that month. One-third of those interested in buying or selling a property in the next 12 months said they'd wait to see how interest rate changes play out before deciding. Meanwhile, more than half (51%) responded that future rate hikes this year will not affect their financial status or plans to buy or sell.

According to Chris Alexander, president of Re/Max Canada, Canadian buyers and sellers are reluctant to move because there is uncertainty about where interest rates will go next and since there have been a few shocks during the current rate tightening cycle. He tells Global News that the primary causes are the Bank of Canada's erratic behaviour and the crucial overnight lending rate, which rises quickly before pausing and then rising again.

"We'll observe more of the same if they hike again. Cautious suppliers and wary purchasers."

Here Is What Alexander Predicted

Credit: Global News

However, Alexander says this is a "smaller segment of the market than people anticipated." He predicts that some homeowners already "on the brink" may leave the market because they cannot afford the carrying costs of a more expensive mortgage.

According to the Re/Max survey, inventory has been scarce this year, with reductions in housing stock from January to July reported in 74.1% of markets year over year.

As noted by Alexander, homeowners who want to move up may feel scared because rising interest rates may limit the types of mortgages they qualify for. According to him, the Canadian housing market's inventory levels would be constrained for a large portion of 2023 due to prospective sellers delaying the sale of existing properties and new projects being postponed due to high expenses for homebuilders.

Prices Could Rise In More Affordable Markets

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While Re/Max anticipates little change in property prices nationwide, some localities are predicted to experience a rise through 2024.

From August until the end of the year, prices are predicted to increase in the Greater Toronto Area (up 2.5%), Moncton, New Brunswick (up 3%), Calgary (up 4.5%), and Sudbury, Ontario (up 5%).

Re/Max predicts that before the end of 2023, home values would fall in Halifax (down 1%), the Greater Vancouver Area (down 2%), Kelowna, British Columbia (down 3%), and the Durham Region of Ontario (down 5%).

According to Alexander, the main differences between these markets as we approach the year's end relate to relative affordability and business possibility.

For instance, Alberta has been expanding its economy outside the oil and gas industry. The province has witnessed a large influx of potential purchasers due to the province's more affordable housing costs. According to Alexander, Sudbury and most of the prairies share the same characteristics.

Despite challenges in the housing market, record levels of immigration are, according to him, helping to stabilize any price reductions and fostering competition for the country's limited housing stock.

According to Alexander, there is frequently increasing pressure on costs because there is too much competition for too little supply.

Research Done For GenZ And Millennials

Credit: Daily Hive

Research conducted by Re/Max shows that a lack of affordable housing options has caused 55% of Gen Z respondents (aged 18¨C28) and 49% of millennial respondents (aged 29¨C43) to alter their housing plans somehow.

According to Alexander, despite a protracted housing correction brought on by the Bank of Canada's swift interest rate increases, "prices are still really high" across much of the nation.

The lack of entry-level properties in most cities and the increased qualification requirements for mortgages make it difficult for young Canadians to enter the market this fall.

If you're a first-time home buyer, you may find entering the market very pricey. According to Re/Max, the Leger poll had a +/- 2.5% margin of error. What do you think about it? Do let us know in the comments.

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