Canadian Real Estate Market Faces Uncertainty and Buyer' Advantage in 2023-2024
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The Canadian real estate market has experienced a concerning trend as national home sales declined by 1.9% between August and September 2023, marking the third consecutive month of decrease. Typically, sales see an increase during this period, making this shift unusual and alarming. While the decline in sales was relatively minimal, cities like Greater Vancouver and Greater Toronto saw more significant drops compared to Edmonton, Montreal, and the Kitchener-Waterloo region. Despite the slowing sales and increased new listings, September 2023 recorded a 1.9% rise in transactions compared to the previous year.
The market has stabilized following a record-setting spring season for sales and prices. With low housing inventory and uncertainty surrounding interest rates, the market is expected to remain slower than usual, particularly in the winter months. New listings increased significantly in September, bouncing back from a 20-year low earlier in the year. However, the declining sales and increasing new listings shifted the market in favor of buyers, with the national sales-to-new listings ratio dropping to 51.4% in September from a peak of 67.8% in April. The Canadian Real Estate Association (CREA) has adjusted its forecasts for the real estate market due to resurrecting inflation and the potential for higher interest rates, leading to a more bearish outlook for 2023. Ontario and British Columbia are expected to experience the most significant decline in residential property transactions due to their credit-dependent markets.
Looking ahead to 2024, a modest rebound in home sales is predicted, along with a 1.5% increase in the national average home price. While Alberta is expected to outperform the rest of Canada in terms of price growth, Ontario's growth is forecasted to be minimal, and other provinces may see modest price increases. The national sales-to-new listings ratio has fallen significantly, leading to a slowdown in price growth, particularly in Ontario, as the housing market faces uncertainty and potential downward trends due to higher interest rates.
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