Home prices in Canada are set to rise this year, according to a new report.
In its latest forecast released Thursday, Royal LePage adjusted its price forecast for 2023 given stronger-than-expected demand and limited supply.
The brokerage now predicts that national home prices will rise 4.5 per cent year-over-year by the end of 2023 instead of dropping one per cent in 2023, as it had predicted in December.
Royal LePage CEO Phil Soper told Global News that high employment and low supply contributed to the change in the forecast.
The report says in Toronto, the aggregate home price is expected to rise 7.5 per cent to $1,148,638 in the fourth quarter of 2023 compared to the same quarter last year. In Vancouver, prices are expected to rise 2.5 per cent to $1,239,123, and in Montreal, three per cent to $560,629.
Nationally, the average price is forecast to rise to $791,170 from $757,100.
As the Bank of Canada announced Wednesday that interest rates will hold steady at 4.5 per cent, first-time buyers are now entering the market since rates seem to have achieved some stability, Soper said. But homeowners have been slow to put their properties for sale, causing an imbalance between supply and demand, which drives prices up.
“At this stage, people are just going ‘hip, hip, hooray’ that (interest rates) have reached a stable point and — critically — home prices aren’t going to be falling further,” Soper said.
A rise in home prices can cause higher demand, Soper explained, as buyers get FOMO (fear of missing out) and try to enter the market while the opportunity is there.
Sales and new listings have steadily been increasing month-to-month, according to the Royal LePage report.
Home prices in Toronto reached $1,108,606 in March compared with $1,096,519 the month before, according to Toronto Regional Real Estate Board data recently released. The numbers indicate prospective homebuyers are regaining the confidence to wade into the market despite borrowing costs climbing and are looking to take advantage of lower prices while they last.
Soper said the real estate market has returned to “sanity” from a year ago when buyers took advantage of low-interest rates and wanted a change of scenery amid COVID-19 restrictions. The high demand caused bidding wars and prices reaching above asking. Royal LePage’s report says that home prices have fallen 9.2 per cent year-over-year to $778,300 on average in Canada for the first quarter of 2023.
“It’s a much saner market for both real estate professionals and for consumers,” Soper said. “The market has entered a period of relative stability now.”
The central bank said in its Monetary Policy Report Wednesday it expects that housing activity to stabilize around the middle of the year.
“Growth in residential investment is anticipated to resume in the second half of 2023,” it read. “Strong demand from immigration should support housing activity over the projection horizon.”
Soper said the market is now trending toward being advantageous for sellers after going through a 12-month correctional period that ended around mid-March. He warns, though, that if supply remains low, prices could get out of hand in 2024, and encouraged more supply to be created.
TORONTO – One expert predicts Ottawa‘s changes to mortgage rules will help spur demand among potential homebuyers but says policies aimed at driving new supply are needed to address the “core issues” facing the market.
The federal government’s changes, set to come into force mid-December, include a higher price cap for insured mortgages to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
CIBC Capital Markets deputy chief economist Benjamin Tal calls it a “significant” move likely to accelerate the recovery of the housing market, a process already underway as interest rates have begun to fall.
However, he says in a note that policymakers should aim to “prevent that from becoming too much of a good thing” through policies geared toward the supply side.
Tal says the main issue is the lack of supply available to respond to Canada’s rapidly increasing population, particularly in major cities.
This report by The Canadian Press was first published Sept. 17,2024.
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
