Real estate: sales and price increases revised downwards for 2022
Just over half a million properties are expected to change hands this year, according to ACI.
The Canadian Real Estate Association (CREA) is slashing its forecast for home sales this year and lowering its expectations for price growth as some of the country's hottest markets slow from their highs during the pandemic.
In its most recent Housing Market Outlook, the Association said it expects 532,545 residential properties to change hands through the Canadian Multiple Listing Service (also known as under the English acronym MLS), which represents a drop of 20% compared to the record achieved in 2021.
Sales will decrease by a further 2.3% in 2023 for number 520,156, ACI continued.
The national average house price is expected to rise 4.7% to $720,255 by year end and rise another 0.2% to $721,814 in 2023.
These forecasts are down from those set out in June, which called for a 14.7% decline in home sales this year, as well as a 10.8% increase the national average price.
The ACI attributed the revision to its forecast to a change in market dynamics, which saw much of its frenzy dissipate in parts of the country where prices were skyrocketing and competition for homes was strong.
In addition, the Association reported a 1% decline in home sales in August, compared to July, for a seasonally adjusted total of 36,914 transactions. The actual number of homes sold was 38,368 units, down nearly 25% from August 2021.
The x27;Economist Rishi Sondhi of TD Economics pointed out that sales fell in August for the sixth month in a row, and were 17% below pre-pandemic levels.< /p>
Sales fell in nine of the ten provinces, with the largest declines seen in Manitoba, Quebec and British Columbia. Ontario was the only province to achieve a gain that was largely fueled by increased sales in Toronto.
In August, domestic sales remained constant month-over-month for the first time since February. Combined with stabilizing supply and demand in many markets, this may herald the end of most of the significant adjustments seen this year in housing markets across the country. , CREA President Jill Oudil said in a statement.
The national average house price hit $637,673 in August, showing a drop of 3. 9% from the same month last year.
Several housing markets, including Toronto, have seen conditions ease in recent months, with rising interest and mortgage rates have dampened sales and started to weigh on prices.
The rate hikes have calmed the unruly bidding wars seen in many markets over the winter, and encouraged some potential buyers to get their hands on a home.
Even in August, which isn't necessarily a time when traditional buyers are ready to act, there were buyers in the market because they knew rents were on point. to start climbing again in early September and that they would face real consequences if they didn't buy, said Davelle Morrison, a Toronto real estate broker for the firm Bosley Real Estate. p>
However, others were more confident that bigger price cuts were coming and preferred to wait before making the biggest purchase of their lives, Ms. Oudil found.
Some buyers may decide to wait for clearer signs of stabilization, both on the borrowing cost side and on the price side, she explained.
Ahead of the release of the ACI data, economist Robert Kavcic of BMO Capital Markets noted that the housing sector was facing a unique situation, as many Prospective buyers had obtained pre-approvals before the Bank of Canada tightening and were now seeing discounts of between 10% and 20% on homes.
If you can buy at a discount with a mortgage rate that no longer exists, that may be attractive, he wrote in a note to investors on Wednesday.
But the big picture is that there is still a huge interest rate shock to absorb.
The last time a yearly increase similar average cost of owning a home was seen in Ontario in the late 1980s, he added.
“In other words, this is the most significant tightening of housing conditions in a generation, and it will be accompanied additional adjustments.
— Robert Kvacic, Economist at BMO Capital Markets
Sellers are struggling to adjust to the new market and some are even holding back listing of their properties.
They don't really seem to understand that […] it's a different market than their neighbor has been doing business with, Morrison noted . They will receive less than their neighbor, even if their house or condo is larger than their neighbor's.
On a seasonally adjusted basis, 67,775 homes were listed for sale on last month, down 5.4% from the previous month. The actual number of new registrations reached 65,776, an increase of 3.3% over the previous year.