CANADA - Currently, the Winnipeg real estate market balances affordability and growth. According to the Canadian Real Estate Association, the average home price in Winnipeg was $816,720 in February. As a result, young families are looking for opportunities in the city's more affordable housing market. The city is also a growing municipality, with newcomers coming from the prairies and providing a jolt of fresh capital into the economy.
Home Prices Could Decline By 15 Percent Off Their Peak
The Bank of Canada has stepped up interest rates to curb inflation, and the housing market has responded by increasing prices. However, a recent report has shown that home prices are likely to decline by about 18 percent in Ontario by December 2023, with some areas suffering a greater decline.
Many borrowers have put their money into the housing market, betting that home prices will increase in the future. They will have built up some home equity by paying off a portion of their loans. This has led to a recent easing of commercial lending standards.
While Moody's Analytics predicts that home prices will decline by 10 percent nationally, a decline of over 20 percent is more likely in areas with dramatic price rises, such as Phoenix and Orlando. The lack of new homes for sale could be a factor in a price decline, even without a recession. However, a slowdown by the Federal Reserve could cause the housing market to tip into recession.
Home Sales Activity Will Fall 13 Percent In 2023
The housing market is slowing, but activity remains healthy for well-priced homes, trade-up activity remains strong, and existing homeowners are taking advantage of equity gains. While new listings are down, the core area sees the most activity, with more movement into core areas than out. The housing market is becoming more balanced, and affordability and lifestyle are becoming key factors in deciding to move. The shelter continues to be an issue, as finding an affordable apartment priced below one month's rent is difficult.
RBC economist Robert Hogue predicts that home sales will dip by 13 percent this year and 14 percent in 2023. He sees home prices peaking this spring and then weakening modestly throughout the rest of the year. The bank has raised its price forecasts for 2022 to 8.1 percent while cutting its projections for 2023 to a 2.2 percent decline.
The report comes at a time when Canadian real estate prices are falling in many markets. For example, the Greater Toronto Area, the Greater Golden Horseshoe, and parts of British Columbia around Vancouver are all decreasing home sales. The declines in these markets and the price slowdown are impacting homebuyers, and it is unclear which group will be most affected.
Greater Toronto Area Will Remain A Key Source Of Strength
Winnipeg real estate is seeing some of its best growth since 2005, and the Greater Toronto Area will remain a major source of strength through 2023. Although house prices in Toronto fell significantly from their highs in Spring 2022, they are now back to a level that is not far from their pre-pandemic highs. While the residential sector is expected to slow somewhat in the short term, non-residential activity is set to continue its growth through 2026, driven by major construction projects such as nuclear refurbishment, new hospitals, and government building restoration projects. By 2026, regional construction employment is expected to increase by over six percent.
Toronto has a diverse economy, with real estate contributing a substantial share to the economy. The city is home to some of the world's most expensive real estate. The city is also home to the Toronto Real Estate Board, which was established in 1920. Toronto's notable attractions include the CN Tower, the world's third-highest observational structure. There are also theaters, museums, and Ripley's Aquarium of Canada.
Edmonton Will Continue To Move Forward In Real Estate
The Alberta real estate market is expected to continue the upward trend it has shown throughout the past decade, with prices continuing to rise and new home starts increasing. According to a report by the Canada Mortgage and Housing Corp. published earlier this month, housing prices and sales are expected to increase significantly this year before moderately declining over the next two years.
The Edmonton real estate market remains stable, even though fewer homes are sold. July's total residential sales were down 14.2% from June and 18.4% from August last year. The number of new listings increased slightly from the previous month but remained remarkably stable from July to August. Single-family home unit sales were down nearly 19 percent, and condo and duplex/rowhouse unit sales fell 14.6% year-over-year.
Although Alberta is experiencing a housing market correction, the overall economy and real estate market are still expected to grow moderately. However, rising rates will constrain supply.
