Forecast: 2023 Housing Market

Forecast is such a terrible word. Why? No one really knows what is going to happen. How many people forecasted the rising mortgage interest rates of last year? I definitely did not. The Bank of Canada didn’t either. Nor did “experts“ predicting gasoline, food or stock market directions.

A forecast is your best guess. The year 2022 proved how poor prognosticators were with interest rates and housing prices. In one word the real estate market was dismal.

Let’s review what the leading real estate and financial institutions predicted for this new year in terms of home prices.

• Canadian real estate association – relatively flat increase of 0.2%

• Royal LePage realty – flat market

• Remax – 3.3% decline

• TD – 10.7% decline

• RBC – trending lower

• Fitch ratings – 5 to 7% decline

What is our best guess? Well, first of all, we meet the clients on the street. We use a technique called a “seal“. Here is what we mean: when a $600,000 mortgage at today’s rate comes in at approximately $3400 per month without property taxes or utilities, we don’t feel very positive.

The high interest rates make homeownership much less affordable. Our prediction is that house prices or Canadian mortgage rates have to drop. Something has to give. We are not smart enough to predict which one. But home prices or rates will drop in order for the market to balance out, especially without large wage increases.