Real Estate

Canadian Housing Market Forecast 2023

Canadian Housing Market Forecast 2023


The Canadian housing market has been a hot topic of discussion recently, and the forecast for 2023 is no different. With record highs in February followed by a steep price decline over last year, many Canadians wonder what the future holds for the housing market. According to experts, home prices in Canada could fall another 11% in 2023, while sales are expected to continue edging down. 

The Canadian Real Estate Association (CREA) recently released their forecast for the housing market in 2023. They expect home sales to edge down less than 1% and prices to fall almost 6% from 2022 levels. This would bring the national average home price down 5.9% annually to $662,103 in 2023. It’s important to note that based on the current trends, these forecasts could change drastically over the year.

Despite this gloomy outlook, there is still hope for those looking to buy or sell a home in 2023. TD Bank recently released its regional housing market outlook, which projects that Canadian average home prices will bottom out in early 2023. This means buyers can take advantage of lower prices before they start rising again later this year. For sellers, now may be an excellent time to list your property, as demand will likely increase as we move closer to the spring lending season when more people are looking for homes.

Key Takeaways

  • Home prices are expected to drop another 11% in 2023 after falling 22% since record highs in February 2022
  • RE/MAX Canada anticipates a modest shift in conditions due to rising interest rates
  • CREA predicts average home prices for 2023 to fall 5.9% YoY to $662,103
  • TD Bank projects that average home prices will bottom out in early 2023
  • Housing demand to increase later in the spring lending season

What Buyers & Sellers Can Expect in 2023

For much of 2023, the housing market is expected to remain a buyer’s market. Homebuyers will have an edge, as experts predict that markets will be more buyer-friendly in 2023 than in previous years, with fewer buyers looking for properties and interest rates projected to elevate as we enter a possible recession.

Home sellers should also prepare themselves for the possibility of lowball offers from buyers who may want deeper discounts to qualify for prime mortgages. Despite elevated mortgage rates and a continuing shortage of homes for sale, the 2023 market has potential benefits for buyers and sellers.

When Will Home Prices Bottom Out in Canada?

It is difficult to predict when home prices will bottom out in Canada as many factors, such as interest rates and economic conditions, can affect the market. However, some experts believe prices have already hit their lowest point and could increase again soon.

The Canadian housing market has been in flux for the past few years, with prices fluctuating monthly. In April 2020, the average house price was $736,000 in British Columbia and $594,000 in Ontario. The typical home price in Canada peaked at $604,000 in February 2022 before declining to $472,000 in December 2022. This marked a 21.9% drop from its peak and a 12% drop from December 2021 to December 2022, according to the Canadian Real Estate Association (CREA). 

Overall, potential buyers and sellers need to keep an eye on the market trends to make informed decisions about their real estate investments. With careful research and analysis of current conditions, buyers may be able to find great deals on properties, while sellers can maximize their profits by selling at just the right time.

Will the Housing Market Crash in 2023?

The housing market in 2023 is expected to remain steady, with some fluctuations caused by a possible recession. While many factors could influence the market, experts believe demand will stay strong, and prices will remain relatively stable.

It is important to remember that no one can accurately predict what will happen in the future. Increased foreign policy risks may make it possible for a housing crash to occur. While a housing crash in 2023 seems unlikely, anything can happen, and both buyers and sellers should always prepare for the worst-case scenario when investing in real estate.

Interest rates are predicted to reduce by the end of 2023, giving buyers access to better purchasing power with more affordable mortgage payments. The supply of homes on the market may also increase over time as sellers decide to list their properties to take advantage of higher prices.

Homebuyers should keep an eye on market indicators such as employment trends and overall economic conditions to prepare them for sudden changes. Similarly, sellers should remain flexible and open-minded about their strategies so they can be adjusted as needed.

Housing Market Predictions from Real Estate Experts

Desjardins Forecasts a 25% Decline in Home Prices

According to a recent report by Desjardins, the Canadian housing market is expected to experience a sharp correction in 2023. Home prices are predicted to drop by 20% in Quebec and 25% in Ontario compared to their pre-pandemic levels. The correction is likely due to rising interest rates and other economic factors such as supply shortages and high material costs.

Overall, Desjardins’ updated forecast suggests that the Canadian housing market will continue to experience declines in 2023 before making a comeback in 2024.

TD Economics Forecasts Canada’s Housing Market won’t Rebound until 2024

It’s no secret that the Canadian housing market has been on a roller coaster ride over the past few years. After seeing a significant increase in home prices and sales in 2020, the market has been hit hard by the pandemic and economic downturn. TD Economics forecasts that the Canadian housing market won’t rebound until 2024.

According to Rishi Sondhi, an economist with TD Economics, Canada will see subdued sales and declining prices this year. This will result in listings falling in the first quarter of 2023 before rebounding later in the year. The report also predicts that home prices will drop by another 7.4%, giving way to increased sales as mortgage interest rates stabilize, steering away from inflationary pressures. Despite this, TD Bank is projecting a solid rebound for Canada’s housing market in 2024, with home sales jumping by more than 19% and prices increasing.

The good news is that TD Economics expects home sales and prices to find their bottom this year, which should relieve those looking to buy or sell a home. However, it’s important to remember that these forecasts are subject to change depending on how well Canada recovers from the pandemic and economic downturn. 

CREA Forecasts a 6% Decline in Home Prices in 2023

The Canadian Real Estate Association (CREA) has released its latest forecast for the housing market in 2023, predicting an additional 6% decline in home prices. This is a significant drop from the 5.3% seen in 2019, as homes have significantly increased in value over this period. It is important to note that all areas will not experience this decrease equally. Some areas may see more significant drops depending on local economic conditions and other factors such as population growth or lack thereof.

The CREA report states that the average selling price of homes will be around $662,103 this year, down from $685,056 in 2022. The national home price index also fell 1.6% to $777,200 from July to August last year on a seasonally adjusted basis.

The main factors driving this decline are expected to be the economic uncertainty caused by the COVID-19 pandemic and rising interest rates. The pandemic has strained many Canadians’ finances and made it more difficult for them to afford a house. Additionally, with fewer people able to buy homes, there is less demand for existing properties which can lead to lower prices overall.

Re/Max Canada Predicts a “Return to Balance” in 2023

As 2023 progresses, Re/Max Canada predicts a return to balance in the housing market. This prediction is based on the current state of the market and the expected economic conditions into 2023. The forecast by Re/Max Canada suggests that prices will decrease by an additional 3.3% in 2023, making it an excellent time for buyers to get into the market. 

The Bank of Canada also predicts a further dip in home prices after delivering its latest interest rate announcement. This could benefit potential buyers as they can purchase homes at lower prices than previously available. Re/Max Canada’s prediction of a return to balance in 2023 is encouraging news for those looking to buy or sell their homes this year. With more affordable housing options on the horizon and lower prices, it could be a great time to move into the real estate market.

Why Canada Housing Market Predictions Might Vary

The housing market in Canada is a complex and ever-changing landscape, making it difficult to make accurate predictions. Several factors can affect the housing market, such as economic conditions, population growth, interest rates, supply and demand, and government policies. As such, it is not surprising that there can be varying opinions on the future of the Canadian housing market.

For example, according to Norada Real Estate, home prices in Canada will fall another 11% in 2023 after falling 22% since record highs in February 2022. However, The Canadian Real Estate Association (CREA) forecasts that average home prices in Canada will only fall 5.9% in 2023.

Supply and demand also play a role in determining how much house prices rise or fall over time. Suppose there is an increase in demand for homes without a corresponding increase in supply. In that case, this could lead to higher house prices as buyers compete for limited properties available on the market. On the other hand, if there is an increase in supply without a corresponding increase in demand, this could lead to lower house prices as sellers compete for buyers who may not be able or willing to pay higher prices for their property.

Finally, government policies can also impact the housing market by influencing supply and demand through taxation or other incentives. Incentives and taxes can encourage or discourage people from buying or selling property at certain times of the year or under certain conditions, such as first-time homebuyers programs, anti-flipping taxes, foreign buyer bans, or taxes. 

Interest rates are another factor that can influence the housing market. Low-interest rates make borrowing more affordable and can increase demand for homes and higher prices. Conversely, high-interest rates can reduce demand for homes and lead to lower prices. 

In 2022, the Bank of Canada (BoC) raised its overnight rate target 7 times from 0.25% to 4.25% due to inflationary pressures. This could significantly affect the housing market going forward into 2023 and beyond. The BoC says it can take 18 to 24 months for the interest rate pressure to work through the economy. 

Predicting what will happen with Canada’s housing market is challenging given all these factors, but understanding them can help us make more informed decisions when buying or selling our homes.

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Regional Housing Forecast for Canada

The Canadian housing market is expected to shift in 2023, with the average residential sale price decreasing by 1% compared to 2021. According to the Canada Mortgage and Housing Corporation (CMHC), housing starts registering 267,443 units at a seasonally adjusted annualized rate in July, barely down from the previous year. TD Bank is projecting a solid rebound for Canada’s housing market in 2024, with home sales jumping by more than 19% and prices increasing.

Re/Max’s 2023 housing market outlook suggests that home prices in Canada will drop an average of 3.3% from the average. However, TD believes that the bottom of the housing market is within sight at the end of 2024 when things genuinely get turned around for the housing market. 

While there may be some short-term home prices and sales declines over the next year or two, there is still hope for a strong rebound in 2024. It will be essential to keep an eye on economic conditions, government policies affecting mortgage rates, and other factors affecting regional markets.

Ontario Housing Market Forecast

The Ontario housing market has been hot for the past few years, but it all ended in 2022. Population growth continues to support housing activity in Ontario cities like Toronto, Ottawa and Hamilton, with an influx of people to these cities creating a need for more homes.

According to the Ontario Real Estate Association (OREA), the average sale price of a home in Ontario is projected to increase slightly in 2023, while the number of units sold will likely decrease. It is important to note that these predictions are based on current market conditions and could change depending on how the market evolves over the year. 

According to TD Bank’s Provincial Housing Market Outlook, steep annual average price declines are expected to occur in 2023. ReMax’s 2023 real estate outlook predicts average price declines of up to 15% in several cities across Ontario. It’s forecasted further drops in home prices over the year for Greater Toronto Area, Durham Region, London, Kitchener-Waterloo and Ottawa.

Real estate analysts forecast home prices to continue to fall in Ontario in 2023, but not likely much further than they have already. Prices have dropped significantly since the pandemic’s start, with some markets reporting price drops of 22%.

BC Housing Market Forecast

The British Columbia Real Estate Association (BCREA) recently released its Fourth Quarter Housing Forecast for the Lower Mainland-Southwest region of BC. According to the report, sales in this region began to fall sharply in the fourth quarter of 2022, and this trend is expected to continue into 2023.

The average home price in Metro Vancouver is forecasted to rise 3.1% to $1,225,000 over the summer before falling 2.9% to $1,190,000 by the end of 2023. This is part of a more significant trend across BC, where home prices have settled at an average of $906,785 in November 2022, which is an 8.6% decrease from the previous year.

BCREA predicts that housing market activity will remain below average throughout 2023, with home sales recorded on the MLS system finishing at 30,000 units before slowing down to 26,000 units by year-end. This gloomy economic outlook and elevated borrowing rates will drag down the BC housing market in 2023.

Quebec Housing Market Forecast

As we enter 2023, the residential real estate market in the province of Quebec is expected to continue slowing, although at a rate half that of 2022. According to the Bank of Canada, home prices in Canada will drop another 11% by the end of 2023. The Quebec Professional Association of Real Estate Brokers (QPAREB) recently released its 2022 report and 2023 outlook on the residential real estate market for the province of Quebec.

Metro Montreal home values have been falling, with buyer demand softening considerably compared to recent years. The average home sold price reached $529,020 in January 2023, with a 5% annual decrease from the year before. Home sales are down 37%, while listings have increased by 8%.

It’s important to note that these projections are based on current market conditions and may change depending on economic factors or other events that could affect the housing market. It’s always best to consult an experienced real estate professional before buying or selling a home in Quebec.

Atlantic Canada Housing Market Forecast

The real estate market in Atlantic Canada is expected to remain stable in 2023, with slow increases in home prices and sales volumes. According to the Canadian Real Estate Association’s fourth-quarter forecast report, the Atlantic region saw favourable activity levels compared to other markets in the country.

Home prices have been rising steadily, with the average price currently sitting at $317,502 – an increase of 4.7% from 2022. This trend will continue into 2023 as demand remains strong amongst buyers seeking more affordable housing options.

As more people move into the region looking for affordable housing options, local buyers are being priced out of the market. While there may be short-term declines in prices over the next year or two, Atlantic Canada’s housing market is expected to remain strong in the long run due to its affordability compared to other regions in Canada.

Prairie Housing Market Forecast

The Prairies are poised to outperform the rest of the country’s housing market performance in 2023. According to the Canadian Real Estate Association (CREA), home prices nationally will drop 5.9% this year, while prices in the Prairie provinces are expected to remain relatively stable. 

The Prairie region has seen an influx of new buyers looking for affordable housing options, which has helped buoy prices in the area. In addition, population growth in the region is expected to outpace other parts of Canada over the next few years, creating additional demand for housing. The Prairies will likely be one of the best places to invest in real estate this year, with prices remaining relatively stable and population growth rising.


Will 2023 be a good time to buy a house?

Despite the uncertainty in the housing market, 2023 could be an excellent time to buy a house. Interest rates and housing prices are likely to reduce while wages rise – a combination that means more buying power.

Is Canada in a housing bubble, and will it burst?

Canadian real estate prices have risen spectacularly since 2000, and with the current pandemic and inflationary pressures, there is speculation that Canada may be bottoming out of a housing bubble. However, experts are mixed on whether or not this bubble will burst; some think prices may take a dip but stay relatively stable, while others expect prices to fall further.

Should I wait to get a mortgage in 2023?

Whether or not you wait to get a mortgage in 2023 depends mainly on your financial circumstances. Consider the current market conditions and forecasts and factor them into your financial and long-term plans. It’s also important to remember that waiting may mean missing out on specific opportunities – especially once mortgage rates start reducing. 

Final Thoughts

The Canadian housing market is expected to remain strong in 2023, with prices continuing to rise. However, potential buyers and sellers need to be aware of the risks associated with the market. With interest rates at an all-time low and the economy continues to grow, there are many opportunities for those looking to buy or sell a home in Canada.

As we look into 2023, potential buyers and sellers must know the risks and opportunities associated with the Canadian housing market. For those looking to buy or sell a home this year, it’s essential to stay informed about current trends in the housing market so you can make informed decisions about your real estate investments. Working with an experienced real estate agent who can help you navigate these uncertain times and ensure you get the best deal possible when buying or selling a home is essential.

Navigating the Canadian housing market can be overwhelming. Whether you’re a first-time homebuyer or an experienced investor, nesto can help you make informed decisions about your next move. With our streamlined financing experience backed by best-in-class technology, we are here to provide you with all the information and support you need when buying a home in Canada. At nesto, our team of commission-free mortgage experts is here to provide you with expert advice and guidance throughout your entire mortgage process. 

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