RE/MAX Canada network expects residential sale prices to remain flat this fall
- While average residential sale prices are softening, there are a few outliers where prices are anticipated to increase, including larger markets such as Greater Toronto Area, (2.5 per cent), Calgary (4.5 per cent), and Sudbury (five per cent)
- Leger survey data shows that 33 per cent of Canadians who are interested in buying and/or selling a home in the next 12 months will wait and see how interest rate changes play out before buying
- Lack of affordable housing inventory is leading more than half of Gen Zs (55 per cent), and nearly half of Millennials (49 per cent) to change their housing plans
TORONTO and KELOWNA, BC, Sept. 5, 2023 /CNW/ — While Canada grapples with the highest interest rates it’s seen in decades, RE/MAX Canada brokers and agents across the country are reporting that both the interest rate climate and lack of inventory are likely to result in a softer market this fall. According to the 2023 Fall Housing Market Outlook Report, the RE/MAX network expects the national average residential sale price across all home types to remain flat, with no change anticipated between now and the end of the year.
“If the fall market is an early indicator for 2024 activity, we may see a very active first quarter as buyers and sellers take advantage of easing prices into the earlier part of next year,” says Christopher Alexander, President, RE/MAX Canada.
The housing inventory shortage is having the greatest impact on Millennial and Gen Z homebuyers. According to a Leger survey commissioned by RE/MAX Canada as part of the report, lack of affordable housing inventory is leading more than half of Gen Zs (55 per cent), and nearly half of Millennials (49 per cent) to change their housing plans.
In addition to the lack of inventory, the interest rate environment is still on the minds of Canadians, especially ahead of the Bank of Canada’s (BoC) next announcement on September 6. According to the Leger survey, 33 per cent of Canadians who are interested in buying and/or selling a home in the next 12 months will wait and see how interest rate changes play out before buying. On the other hand, over half of Canadians (51 per cent) say further interest rate increases this year will not change their financial situation or impact their plans to buy or sell a home. Overall, younger Canadians are more likely to rely on BoC interest rate announcements to determine the best time to buy or sell (47 per cent of Gen Zs and 52 per cent of Millennials).
“While we wait for governments to implement a tangible national housing strategy to boost Canada’s supply of both affordable and diverse housing, the market is starting to ease in some regions. This is bringing some much-needed relief from the sky-high prices we’ve experienced over the past couple of years,” continues Alexander.
Adds Elton Ash, Executive Vice President of RE/MAX Canada, “The Canadian housing market has historically given homeowners great returns and solid financial security. We believe in the long-term health of Canada’s housing market, but in order to protect it, we need to acknowledge and address the housing supply shortage in every city, town, and neighbourhood across the country.”
As part of the 2023 Fall Housing Market Outlook Report, 74.1 per cent of RE/MAX broker regions surveyed saw the number of listings decrease between 1.2 up to 40 per cent between January – July year-over-year (2022 and 2023). The number of sales transactions in all regions surveyed as part of the report experienced declines year-over-year from a decrease of 4.1 per cent to upwards of 39.6 per cent.
Regional Market Insights
RE/MAX brokers and agents in Canada were asked to provide an analysis of their local market between January and July 2022 and 2023 and share their estimated outlook for fall 2023. Based on their insights, 44 per cent of housing markets in Canada are expected to be sellers’ markets in 2023, while the rest are anticipated to be a mix of balanced, buyers, and sellers/balanced and buyers/balanced (mix depending on location in the specific region).
Western Canada and the Prairies
Contrary to other regions across the country, in Western Canada and the Prairies, the majority of markets are anticipating average residential sale prices to increase this fall by 0.7 per cent – 4.5 per cent in regions such as Calgary, AB, Edmonton, AB, Winnipeg, MB, Red Deer, AB. On the flip side, regions such as Greater Vancouver Area (GVA), BC, Kelowna, BC, are expecting sales to soften by two – three per cent.
The mix of outlooks is also reflective of the estimated market type heading into the fall, with the majority of regions reporting a mix of sellers/balanced depending on the price point, property type, location in the specific region.
Ontario
Ontario is a diverse mix of average residential sale price estimates heading into the fall, with seven regions reporting a decrease expected including Hamilton, ON, Ottawa, ON, Windsor, ON (two per cent), North Bay, ON (three per cent), Kitchener-Waterloo, ON (four per cent), Durham Region, ON, Peterborough, ON (five per cent), while Thunder Bay, ON, and Peel Region, ON are likely to remain relatively flat (zero per cent) this fall.
Regions that are anticipating an increase in average residential sale price estimates this fall include; Burlington, ON (one per cent), Lakelands West, ON, Oakville, ON (two per cent), York Region, ON (2.2 per cent), Greater Toronto Area (GTA), ON (2.5 per cent), Sudbury, ON (five per cent).
In Ontario, 53 per cent of markets are likely to be sellers markets this fall, while 40 per cent are anticipated to be balanced, and seven per cent buyers.
Across Ontario, the simultaneous impact of inventory shortages and rising interest rates has influenced markets throughout 2023 and will continue to do-so heading into the fall. Lack of inventory is the most pressing factor influencing activity this fall in regions such as Sudbury, ON, Peel Region, ON, and Ottawa, ON, while other markets reported both being major contributors to market activity this fall.
While rising interest rates throughout 2023 has created some consumer reluctancy to enter the market in some regions, by comparison, buyers in regions like Hamilton and Burlington were actually aided by rising interest rates this year.
In regions, like the GTA, it’s important to note that while inventory will continue to be a challenge in the long-term, in the short-term, as we look ahead to the fall, interest rates are likely to be the most pressing factor influencing the market. Regions such as Hamilton–Burlington are also likely to be most heavily impacted by interest rates heading into the fall.
Quebec
The island of Montreal experienced a decrease in prices by 5.8 per cent between January – June 2022 and 2023, as well as an 18.2 per cent decrease in number of sales. Conversely, number of listings increased by 63.7 per cent in the same period. Unlike other regions, the area has properties available, however, mostly renovated, and well-priced homes are moving quickly. The region is also seeing a new trend of assuming sellers’ mortgages, transferring mortgage, or paying in cash, primarily among high-end buyers. RE/MAX brokers reported an increase in these practices as a way for buyers to combat rising interest rates and mortgage payments.
Atlantic Canada
Keeping with the trend across the country, all markets in Atlantic Canada surveyed reported low inventory in tandem with rising interest rates which have adversely affected the market, especially for buyers with lower price points (Halifax, NS, Charlottetown area, PEI), or first-time homebuyers (St. John’s, NF).
In Atlantic Canada, average residential prices are expected to decline between one and two per cent in Halifax, NS and Charlottetown Area, PEI for the remainder of 2023 and increase by three per cent in Moncton, NB. Average residential prices are expected to remain flat in St. John’s, NF for the back-half of 2023. Most markets in Atlantic Canada are considered sellers’ markets (St. John’s, NL, Halifax, N.S and Moncton, NB) apart from the Charlottetown area, PEI, which is considered balanced.
About Leger
Leger is the largest Canadian-owned full-service market research firm. An online survey of 1,517 Canadians aged 18+ was completed between July 21 and 23, 2023, using Leger’s online panel. Leger’s online panel has approximately 400,000 members nationally and has a retention rate of 90 per cent. A probability sample of the same size would yield a margin of error of +/- 2.5 per cent, 19 times out of 20.
About the RE/MAX Network
As one of the leading global real estate franchisors, RE/MAX, LLC is a subsidiary of RE/MAX Holdings (NYSE: RMAX) with more than 140,000 agents in almost 9,000 offices with a presence in more than 110 countries and territories. RE/MAX Canada refers to RE/MAX of Western Canada (1998), LLC, RE/MAX Ontario-Atlantic Canada, Inc., and RE/MAX Promotions, Inc., each of which are affiliates of RE/MAX, LLC. Nobody in the world sells more real estate than RE/MAX, as measured by residential transaction sides.
RE/MAX was founded in 1973 by Dave and Gail Liniger, with an innovative, entrepreneurial culture affording its agents and franchisees the flexibility to operate their businesses with great independence. RE/MAX agents have lived, worked and served in their local communities for decades, raising millions of dollars every year for Children’s Miracle Network Hospitals® and other charities. To learn more about RE/MAX, to search home listings or find an agent in your community, please visit remax.ca. For the latest news from RE/MAX Canada, please visit blog.remax.ca.
About the 2023 RE/MAX Canada Fall Outlook Report
The 2023 RE/MAX Canada Fall Outlook Report includes data and insights from RE/MAX brokerages. RE/MAX brokers and agents are surveyed on market activity and local developments. Average sale price is reflective of all property types in a region and varies depending on the region. When referring to “fall” this includes the months of August 2023-December 2023. Regional summaries with additional broker insights can be found at RE/MAX.ca.
Forward looking statements
This report includes “forward-looking statements” within the meaning of the “safe harbour” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as “believe,” “intend,” “expect,” “estimate,” “plan,” “outlook,” “project,” and other similar words and expressions that predict or indicate future events or trends that are not statements of historical matters. These forward-looking statements include statements regarding housing market conditions and the Company’s results of operations, performance and growth. Forward-looking statements should not be read as guarantees of future performance or results. Forward-looking statements are based on information available at the time those statements are made and/or management’s good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. These risks and uncertainties include (1) the global COVID-19 pandemic, which has impacted the Company and continues to pose significant and widespread risks to the Company’s business, the Company’s ability to successfully close the anticipated reacquisition and to integrate the reacquired regions into its business, (3) changes in the real estate market or interest rates and availability of financing, (4) changes in business and economic activity in general, (5) the Company’s ability to attract and retain quality franchisees, (6) the Company’s franchisees’ ability to recruit and retain real estate agents and mortgage loan originators, (7) changes in laws and regulations, (8) the Company’s ability to enhance, market, and protect the RE/MAX and Motto Mortgage brands, (9) the Company’s ability to implement its technology initiatives, and (10) fluctuations in foreign currency exchange rates, and those risks and uncertainties described in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission (“SEC”) and similar disclosures in subsequent periodic and current reports filed with the SEC, which are available on the investor relations page of the Company’s website at www.remax.com and on the SEC website at www.sec.gov. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made. Except as required by law, the Company does not intend, and undertakes no duty, to update this information to reflect future events or circumstances.
SOURCE RE/MAX Canada
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