(OTTAWA) The Canadian Real Estate Association has revised down its forecast for home sales this year and lowered its expectations for price growth.
Posted at 10:45am
Updated at 12:38 p.m
In its latest outlook for the housing market, the association expects 532,545 residential properties to change hands through the Canadian Multiple Listing Service (aka MLS), down 20% from the 2021 record.
The national median home price is expected to rise 4.7% to $720,255 by the end of the year and a further 0.2% to $721,814 by 2023.
That forecast is lower than June’s, which called for a 14.7% drop in home sales this year and a 10.8% rise in the national average price.
Meanwhile, CREA reported a 1% decline in home sales in August compared to July, for a seasonally adjusted total of 36,914 transactions. The actual number of homes sold was 38,368 units, down almost 25% from August 2021.
The nationwide average home price reached $637,673 in August, down 3.9% from the same month last year.
“In August, national sales were flat month-on-month for the first time since February. This, combined with stabilization in supply and demand in many markets, could herald the end of most of the significant adjustments seen in housing markets across the country this year,” ACI President Jill Oudil said in a statement .
Several real estate markets, including Toronto, have seen conditions ease in recent months as rising interest rates and mortgage rates have dampened sales and begun to weigh on prices.
The rate hikes calmed the stubborn bidding wars seen in many markets over the winter and encouraged potential buyers to wait for deeper price declines.
Mme Oudil believes several potential buyers are yet to be pushed into the market despite some recent declines.
“Some buyers may choose to wait for clearer signs of stabilization on both the cost of credit side and the price side,” she explained.
Ahead of the release of the CREA data, economist Robert Kavcic of BMO Capital Markets noted that the real estate sector is facing a “unique” situation as many potential buyers had received pre-approvals prior to the Bank of Canada’s tightening and are now receiving rebates of the order of magnitude of 10% received between 10% and 20% on houses.
“If you can buy at a discount with a mortgage rate that no longer exists, that can be attractive,” he wrote in a note to investors on Wednesday.
“But the bigger picture is that there is still a huge interest rate shock to absorb. »
The last time there was a similar annual increase in the average cost of owning a home in Ontario was in the late 1980s, he added.
“In other words, this is the most significant tightening of housing conditions in a generation, and it will be accompanied by further adjustments. »
Note to readers: corrected version. CREA’s previous forecast for the median home price was a 10.8% increase, not a $10.8 increase as was erroneously written in a previous version.