CREA expects average housing price to be 4.8% lower by the year-end than in 2022, but to grow back by 4.7% next year

The latest report by the Canadian Real Estate Association (CREA) says the average home price by the end of this year will be 4.8% lower than a year ago. However, the price is expected to rise by almost the same amount next year.

According to CREA, an average home price will reach $670,389 in 2023 and $702,214 in 2024, going up by 4.7%.

Small changes in monthly sales are anticipated since the summer of 2022 and moderate monthly increases reported in February and March, as homebuyers are more inclined to get back to the market.

“The spring market is heating up and it seems that while some buyers are returning to the market, but it’s important to remember that the intense market conditions of recent years haven’t been solved, they were just on pause,” – noted Jill Oudil, CREA’s chair.

The real estate market Canadians are going back to right now has faced months of declining sales, lower listings, and pessimistic buyer sentiment as eight interest rate increases in a row raised the cost of borrowing.

However, the rate has been kept unchanged twice in a row recently, encouraging some to consider a purchase once again.

Rishi Sondhi of TD Economics says March marks the second month in a row with higher sales.

In his opinion, it was caused mostly by interest rates stabilizing, which helped “buyer psychology” and supported a strong job market.

“We believe further sales increases are possible in 2023, though an important downside risk comes from looming regulatory changes that will make it even more difficult to qualify for a mortgage,” – he added.

As monthly sales were up slightly, the number of new listings remained at 20-year lows, CREA says.

The report says that on a seasonally-adjusted basis, there were 53,298 new listings last month, marking a 5.8% drop from February. Actual new listings reached 68,597, which is 27.4% lower than a year earlier.

With historically low market supply, Oudil says homes are selling fast, but it’s still not enough to make some sellers list their homes.

According to Robert Kavcic, a senior economist with BMO Capital Markets, people don’t sell amid a down market for several reasons.

“Potential sellers don’t want to sell during a down market, and expectations are rising that the worst of the correction is already behind,” – he noted.

“The central bank’s guidance has helped establish this improved market psychology.”

As that change in thinking started, CREA found that the average home price showed an annual decline of 13.7% and stopped at $686,371 in March.

If we exclude the hottest markets of the Greater Toronto and Greater Vancouver Areas from calculations, the national average price will be cut by more than $136,000.

On a seasonally-adjusted basis, the average real estate price rose slightly by 2% compared to February and reached $648,088.

According to CREA, the average price rose by about $75,000 from January.