Buying? Selling? 2023 Metro Vancouver real estate forecast released
Posted December 13, 2022 9:35 am.
Last Updated December 13, 2022 7:38 pm.
If you’re looking to get into the housing market, it seems this coming year might not be the one, as one real estate company expects Vancouver to remain the most expensive city in the country in 2023.
Royal LePage says the Greater Vancouver region will see a dip in home prices of about one per cent year-over-year in quarter four of next year to $1,216,611.
Royal LePage says during the same period, the median price of a single-family detached home is expected to decline two per cent to $1,644,538, while the median price of a condominium is forecast to buck the trend and increase one per cent to $747,299.
“Although many buyers are still sitting on the sidelines, activity levels are showing signs of a return to seasonal norms in Greater Vancouver. Attractive properties in sought-after neighbourhoods that are priced properly continue to sell quickly,” Randy Ryalls, managing broker at Royal LePage Sterling Realty, said.
“With supply still well below what is required for the market to be considered balanced, I expect we will begin to see prices stabilize in the spring and summer, when some sidelined buyers return to the market.”
Ryalls says many sellers are hesitant to list their properties, as there is limited stock to up-size to.
“The supply shortage is a self-fulfilling cycle. Sellers won’t list their home if they cannot find another property to purchase. Despite weakened demand in the second half of this year, the lack of available inventory has kept prices in the region from declining further. And, if activity picks up in the new year as expected, it will not take long for tight competition to challenge buyers once again,” he said.
Royal LePage CEO and President Phil Soper says after two years of “record price appreciation,” which was fueled by household savings and low borrowing costs, the Canadian housing market began its downward slide, intensified by rising interest rates.
“In an era characterized by the unusual, this correction has not followed historical patterns. While the volume of homes trading hands has dropped steeply, home prices have held on, with relatively modest declines. We see this as a continuing trend,” he said.
The supply of homes for sale must exceed the demand in order for prices to drop materially, he explains, and Canada is struggling with an acute, long-term housing supply shortage.
“Traditional wisdom says that a recession triggers widespread job losses and missed mortgage payments. People are forced to sell or the bank forecloses and lists the property, flooding the market with new listings when demand is weak. In this post-pandemic period, people have kept their jobs. In fact, they have seen wages and salaries rise,” Soper said.
“We have a tightly managed national mortgage portfolio, with historically low default rates, supported by homeowners who have been required to qualify for a loan under the strict federal stress test for the last five years. And, we can’t forget that Canada has been grappling with an acute shortage of homes overall. We simply don’t see the factors at play that would result in a large drop in home values.”
NerdWallet Canada’s B.C. Real Estate Association report dives a little further into what’s to come in the province.
“The national ban on foreign buyers, which comes into effect on Jan. 1, could have a couple of effects, neither of them positive for B.C. homebuyers. The ban could lead to increased sales activity, and possibly firmer prices in December, but I don’t believe demand will be affected enough to bring prices back down to earth once the calendar flips,” explained NerdWallet’s Clay Jarvis.
Jarvis adds that the Bank of Canada’s rate increases might not be done either, and they’ll keep adding to the massive pressure on homebuying budgets.
Going forward, Jarvis had some thoughts on how homebuyers can be more efficient with their purchases if they can exercise some patience.
“The Bank of Canada may be nearing the end of its rate-hiking, so variable rates are looking a little more attractive. Variable rates may inch up a little in the first quarter of 2023, but that should pose little problem for borrowers who are able to pass the stress test.”
Jarvis expects the Bank of Canada’s rates won’t just stop hiking, but they could start dropping as soon as 2024.
–With files from Dean Recksiedler