Written by Breck Hapner
Editor’s note: Welcome to the Haven State of the Canadian Housing Market series. Every month, we will share an update explaining details and projections related to Canada’s real estate sector to keep you informed.
The Canadian Real Estate Association (CREA) has lowered its forecast with respect to the Canadian housing market for the remainder of this year. After comparing present trends with April 2023 statistics, it became apparent that a two-percent reduction in home values wasn’t actually what was going to happen.
In an article from October 13th, 2023, CREA adjusted their forecast to reflect the reality of Canadian home sales data supplied by their September update, which shows negative momentum in the Canadian real estate market during the remaining three months of 2023.
This comes as no surprise, as the September listing numbers were much higher than anticipated. The sales-to-new-listing ratio dropped from 70 to 50 percent, indicating a notable shift. Over the past five months, there have been more listings relative to sales. Coupled with the effects of considerably higher mortgage rates, the market is experiencing severe repercussions.
So, what do the new numbers look like? According to an October 13th Bloomberg report, CREA is now expecting a 9.8 percent decrease in sales compared to 2022. CREA is referencing sales, not prices, which is an important distinction. The predicted change in prices is a negative 3.3 percent compared to last year.
Why the discrepancy? Because of the supply numbers. There is not enough supply to handle the number of Canadians seeking homes, as well as those immigrating to Canada, which is affecting housing market dynamics.
The new CREA projected home price is $680,686. Previous CREA forecasts anticipated a 6.8 percent decline in sales and a two-percent decrease in prices. However, because of so many unanticipated new listings in a market already experiencing reduced activity, the projection had to be revised.
In our October recap, Haven will take a further look at the numbers: how Canada’s housing market is reacting to prevailing economic factors influencing real estate.