In the face of high inflation and rising interest rates, Canada’s realtors are looking forward to “the start of a turnaround” this year.
In its latest Quarterly Forecast the Canadian Real Estate Association is projecting a modest 0.5% decline in sales volume for 2023 with just under 496,000 properties changing hands.
In its monthly report for December, CREA recorded a 1.3% increase in sales over November. On a year-over year basis, though, sales plunged 39.1% compared to December of 2021.
The quarterly prediction for pricing is also significant with a forecast drop of 5.9%, putting the national average price at little more than $662,000. However, CREA points out, that decline is calculated against record setting prices from early last year, before interest rates started moving up and significantly cooling the market.
The December report shows a 12% year-over-year drop in the average price to $626,000. The association’s preferred pricing measure – the Aggregate Composite Home Price Index – shows a 7.5% drop from December of 2021.
The supply of homes for sale tightened again in December with the number of new listings falling by 6.4% compared to November.
The number of housing starts, as reported by Canada Mortgage and Housing Corporation, was down by an annualized rate of 5% for December. The agency’s Housing Supply Report shows single-detached urban homes posted the largest decline at 11%.
Tight supply combined with inflation and high interest rates, will continue to present a major barrier to first time buyers through 2023 and onward until interest rates decline or, at least, stabilize.
Looking ahead to 2024 CREA is forecasting a 10% increase in sales with the national average price increasing by 3.5% to $685,000, which is on par with 2021.
And, one quick technical note: This year the Canadian Real Estate Association has changed the timing of its Quarterly Forecasts. The report that had been coming out in December is now being released in January. The move allows the association to capture and analyse all of the available data for the 4th quarter.