Have you heard the news that Canada’s housing market is going to crash in 2023? We are still determining how true this is, but based on the statistics and data we have gathered from various sources, let’s look at how all these things will work out and see if it’s really going to crash.
Since the start of Russia Ukraine war, the global financial balance has taken a major hit. People think a war in the other part of the world won’t affect this side, but this is false. When devastating events like war occur, it affects those countries and can change the course of various trades and finances around the world.
At PrestoCash, we don’t just want to provide you with instant e-transfer loans but also want to help you build your financial knowledge so that you can protect yourself from the adversities that accompany war. As there is nothing we can do about war, we can still know how these things will affect us. So let’s examine how these things will affect the Canadian housing market in 2023.
Canada housing market
In order to account for greater sales and price losses in 2023, followed by a comeback in 2024, TD Economics has updated its projection for Canada’s housing market. The bank predicts that home prices in Canada, which have fallen 22% from record highs in February, will fall 11% in 2023, and sales will fall 16%.
In early 2023, house sales are expected to reach a low point of roughly 20% below their pre-pandemic levels due to rising loan rates, which, together with skyrocketing prices, have rendered home ownership impossible for most of Canadians.
In 2024, TD predicts a significant home market recovery in Canada. The bank projects that in 2024, home sales will increase by more than 19%, and prices will rise by 6%.
Because the average home price in Canada continues to be much higher than the current US median price of roughly $390,000, the affordability crisis is affecting Canadians far more severely than it is affecting Americans.
The median price of a home in Canada soared to a record $604,000 in February before falling to roughly $470,000. The Canadian dollar is currently worth around $0.74. The Canadian affordability index uses the accepted criterion that monthly housing costs shouldn’t be more than 30% of monthly income.
Ontario Housing market forecast
If you are a resident of Ontario, then you may be wondering how the Ontario Housing market will perform next year. Real Estate experts have predicted that Ontario sales could drop 33% this year and 16% by next year. The prices will struggle to rise in 2023, but they are expected to rise by 2024 by 4%.
Alberta housing market forecast
Similar to Ontario, Alberta will witness a drop of 2% in prices by the end of Q4 of 2022, and it is expected to fall another 22% in 2023. However, that’s not all; the prices gain is also expected to be the slowest among all other provinces, staying at 3% and declining another 7% in 2023, according to TD Economics.
Edmonton housing market forecast
In an interview with Nathan Mol, a renowned real estate agent in Edmonton. Edmonton’s real estate market is a balance between the supply and demand of houses. Currently, market conditions are said to favor sellers, but as in general economics, when the prices are higher, the number of buyers will surely fall, and this simple move brings the cost down.
But this time, even if the buyers are declining, the Edmonton market is witnessing a low housing inventory.
These are three popular places where people are looking to buy or sell houses and want to know how real estate is working in this area. But the effects are not limited to just these areas; almost every part of Canada is experiencing loss in real estate sales and price drops.
How will these benefit People?
Whether you are a continuous buyer of property or a one-time buyer for a family, you can do different things to make the best of this situation. But you have to be cautious while making any major financial move. There are different factors that you have to consider while buying a home for investment purposes.
Moreover, the recession is also an important factor you need to note. These times will be hard on many people, but if you have enough financial knowledge, you can take advantage of this situation.
When prices for real estate go down, it is generally for a few months or years, and after they recover, they yield a higher ROI. But sometimes, they do not grow. And that is, the risk of investment could be due to poor locality, local jurisdiction, or new situations and changes in a consumer behavior pattern. They all can affect the price rise of real estate in a particular place.
Bank interest rate
According to new research from the Royal Bank of Canada, the average Canadian home costs 67% more than the average household can afford. According to the study, the average household would have to devote 60% of its income to housing expenses.
According to an analysis from Desjardins, housing affordability in Canada will worsen for an additional three to six months as a result of higher interest rates.
Since March, the Canadian central bank has increased its benchmark interest rate by 300 basis points, a larger increase than the ones implemented by the US Federal Reserve.
According to Desjardins’ Affordability Index, Edmonton and Calgary will regain their pre-pandemic affordability levels by the end of 2024, while Toronto, Montreal, and Vancouver will take longer because they saw the biggest increases in home prices.
The Canadian Real Estate Association reports that in September, the average price of a property in Toronto and Vancouver was above $800,000.
So, based on all factors, the Canada housing market will initially crash, but by the end or the starting of 2024 it will gradually rise. So, you can decide whether you should buy a home or wait for the market to crash more. But be sure to consider every aspect of finance before buying because a small miscalculation can cause major trouble. And yes, don’t forget, if you need any extra cash immediately, you can always count on us to get an instant e-transfer loan.