Where Ontario's housing market is headed in 2023

Where Ontario's housing market is headed in 2023

Click the link above to read the full article. The article was published on January 2, 2023 and written by Mike Crawley at CBC.

Whether you are a homeowner or looking to get into the market this article shares 2023  Ontario real estate insights. Ontario housing has seen some of the highest increases in prices worldwide! 2022 saw those prices somewhat correct, but what is in store for 2023?

We have seen a correction in most every market in Ontario the past year. Yet, it is important to remember where we came from. According to CREA, the recent correction brought prices back to September 2021 levels.

The Canadian Real Estate Association (CREA) benchmark price of a home in Ontario — a measure that combines sale prices of condominiums, attached and detached houses across all markets in the province — peaked at $1.08 million in March of 2022. That was a staggering 64 per cent leap in just two years, from the start of the COVID-19 pandemic.

It seems most analysts are of the opinion that the "bulk of the correction ... is behind us". If true, this is good news for homeowners but not so great for those waiting to get in at better (lower) prices.

Overall, real estate analysts generally expect home prices to continue to fall, but not a lot further than they already have. Rishi Sondhi, of TD Economics, forecasts prices in Ontario will decline through early 2023 but bottom out in the second half of the year. "We are expecting further downside [to prices] but less relative to what we've seen so far," said Sondhi in an interview.

Why do analysts think this?

...there are some signals that the bulk of the Bank of Canada's interest rate hikes are behind it.

Seven rate hikes in 2022 led to payment increases for Canadians holding variable rate mortgages. Canadian homeowners may not be willing to sell their homes. After seeing homes sell for more on their street, more are sitting tight.

On the supply side, many property owners are reluctant to list their properties given how the prices dropped, yet many investors could be forced to sell due to the higher carrying costs of those high interest rates.

Like the stock market, investors and businesses want certainty. The uncertainty of where rates are going this year freezes a lot of potential buyers. If the Bank of Canada signals they are done raising rates, that would provide more certainty in the market. Allowing for potential buyers and sellers to more easily settle on a value of homes.

Mark Ostland, a real estate expert with Meridian, Ontario's largest credit union, says if the Bank of Canada is done raising rates, that will give more confidence to potential buyers.

This chart shows the rise of home prices before 2006, including the sharp rise since the pandemic.

From the seller perspective, Canadian homeowners are staying pat and being patient. This is limiting the supply of homes available for sale, which is already an issue in Ontario.

From the buyers perspective, timing the market is always difficult. More importantly, continue to save, do your homework on what you can afford and find the right place.

The article was published on January 2, 2023 and written by Mike Crawley at CBC. Check out Mike's Twitter account here.

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