The housing market has been through many ups and downs over the past few years. While the American housing market saw a few plunges—largely due to the pandemic—the Canadian housing market did not fall in the same way. This can be attributed to several factors, including a more regulated banking system that prevented lenders from giving mortgages to those who could not afford to pay them, compulsory mortgage insurance for many borrowers, and more.
So what does this mean for the Canadian housing market in 2023? Keep reading to learn more about the housing market predictions for the coming year and find out if it’s a good time to buy a house.
A RISE IN INTEREST RATES
According to the information just released to the public, RBC, TD Bank, BMO, CIBC, Scotiabank, and National Bank have all raised their prime rates to 6.45% (where previously it was 5.95%). This means that interest rates for mortgages are set to rise in 2023. This is nothing unheard of, as interest rates have risen and fallen in the past, but for those planning to purchase a home in 2023, it is something to keep in mind. A rise in interest rates doesn’t mean that home ownership is no longer an achievable goal—far from it in fact! All it means is that if you’re planning to buy a house in the coming year, you might have to save up a little more than you were first planning or possibly wait until the latter half of the year to buy. Don’t let the rising interest rates scare you, as there is another important factor that has allowed the market to balance itself.
A FALL IN HOUSING PRICES
A Canadian real estate outlook created by Desjardins outlines how it is very likely that there will be a general fall in house pricing across Canada, particularly in Ontario and British Columbia. They expect a 23% decline in the average home price between February 2022 and December 2023, which, with the fall in sales, will leave the market balanced. Considering that the prices of the houses themselves are set to fall though, this also helps balance out the rising interest rates, making buying a house in 2023, especially later on in the year, a prospect on par with, if not better, than the previous year.
This outlook was further backed up by the Canada Mortgage and Housing Corporation, which predicted that home prices will continue to drop. The housing agency’s chief economist, Patrick Perrior, expects the national average home price to fall from $770,812—which was the peak amount in the first quarter of this year—by 15% come the end of the second quarter of 2023.
IS 2023 THE RIGHT TIME TO BUY A HOUSE?
While the rise in mortgage interest rates can be intimidating, the projected fall in house prices is extremely hopeful to see. This makes the market for real estate in 2023 that much brighter for buyers, and with the right real estate team, you’re sure to find your dream home this coming year.
If you’re looking to buy or sell a home, John Burdi, Broker, Burdi Real Estate – RE/MAX West Experts can help you navigate the ups and downs in the housing market and get the best deal possible. Contact him today to learn more!
