Prospective buyers have been seen complaining about the pace of Canada’s real estate market in the past few years. Will things change in the New Year 2023? Let us take you through some forecasts and expert predictions to give an insight into what lies in the year ahead. The current scenario is that prices have been on the decline with us witnessing fewer bidding wars (and hence no unconditional offers), and experts are hoping that Bank of Canada’s quick interest rate hikes which have shot up the monthly mortgage payments, will slow down. While all this looks good, Economists have worrisome news, with some of them predicting a recession for Canada in the New Year, though no bets are being laid on the severity of this recession.
Even though Douglas Porter, chief economist at BMO Capital Markets is betting on a 25 to 30 per cent chance that Canada may be able to barely avoid the recession, but he doesn't outrightly deny the possibility of a recession. The less severe the hit on the economy, the better it will be for the housing market. Even then, according to Porter, the housing market is one of the weakest components of the economy at this point. Porter further predicted that at the end of the current economic cycle, home prices would see a downward trend and the fall would be between 20 to 25 per cent. As per Canadian Real Estate Association, for the month of December 2022, the national average home price has witnessed a 12 per cent decline in comparison to the same month last year.
Porter further spoke about the wariness of the sellers as well as the buyers. Sellers do not want to list their properties for sale just yet as they feel they will not get prices similar to what their neighbours sold for in the previous year. On the other hand, buyers too are sitting tight waiting for better rates. Any decreases have been overshadowed by the quick succession of rate hikes by the Bank of Canada which is currently at 4.25 per cent. This is the highest rate since January 2008.
Whatever the year brings, it is very hard to pinpoint as the analysts are also worried about the unpredictable nature of the pandemic. 'Is it over yet?'
If you are looking to buy a house in Canada and need a guiding hand on any aspect related to buying a home and mortgage-related issues or have questions or doubts, do contact us at LendX Financial in Brampton, Greater Toronto Area.