Royal LePage’s Q1 2023 Home Price Update and Market Forecast
Canada’s real estate market: Buyers are back, but where is the inventory?
With demand outpacing supply, Royal LePage adjusts forecast upward following stronger-than-expected start to 2023
First quarter highlights:
- National aggregate home price forecast to increase 4.5% year-over-year in Q4 2023
- Single-digit price gains in first quarter driven by early return of sidelined buyer demand and continued shortage of inventory
- National aggregate home price up 2.8% quarter-over-quarter in Q1 2023; down 9.2% over same period in 2022
- Greater regions of Toronto, Montreal and Vancouver post quarterly aggregate price gains of 4.8%, 1.3% and 1.3%, respectively in the first quarter
- Royal LePage urges OSFI to heed the economic dangers that would accompany new, aggressive mortgage restrictions
According to the Royal LePage House Price Survey released today, the aggregate price of a home in Canada decreased 9.2 per cent year-over-year to $778,300 in the first quarter of 2023. On a quarter-over-quarter basis, however, the aggregate price of a home in Canada rose 2.8 per cent, as buyers began to come off the sidelines following the Bank of Canada’s decision last month to pause interest rate hikes for the first time in a year.
“There has been nothing ‘typical’ about Canada’s housing market since the start of the COVID-19 pandemic. Lock downs brought the housing market to a grinding halt in early 2020 before the work-from-home revolution catapulted it into a two-year, all-season frenzy of record sales volumes and aggressive price growth,” said Phil Soper, president and CEO of Royal LePage. “As markets do, this market overshot, and the inevitable correction was triggered when the Bank of Canada began to rapidly raise interest rates. The downturn came swiftly, and the real estate industry remained depressed for twelve months, a longer correction than the aftermath of the financial crisis thirteen years ago. We have turned the corner and the housing economy is growing again; none too soon for many buyers, who have been waiting patiently for prices to bottom out.”
The Royal LePage National House Price Composite is compiled from proprietary property data, nationally and in 62 of the nation’s largest real estate markets. When broken out by housing type, the national median price of a single-family detached home declined 10.7 per cent year-over-year to $808,700, while the median price of a condominium decreased 6.7 per cent year-over-year to $571,700. Quarter-over-quarter, median prices for these two property segments were up 3.4 and 1.8 per cent, respectively. Price data, which includes both resale and new build, is provided by Royal LePage’s sister company RPS Real Property Solutions, a leading Canadian real estate valuation company.
“Sanity is slowly returning to the housing market,” added Soper. “While some buyer hopefuls will remain sidelined by a reduced capacity to borrow in this higher rate environment, our market data shows that many of those who chose to pause their search to see where prices and interest rates would land have resumed their home buying plans. Unfortunately, the challenge they must now deal with is a severe shortage of homes for sale.”
Royal LePage’s internal data and real estate boards across the country report that home sales have been trending upward since the start of the year, as buyer activity picks up. The number of available homes for sale, however, remains too low to satisfy demand.
In Canada’s major urban centres, sales and new listings are steadily increasing on a month-to-month basis, despite being down compared to this time last year.