The Canadian Real Estate Association (CREA) recently updated its forecast for home sales activity and average home prices of Canadian real estate boards and associations for 2023 and 2024.
Some 449,614 residential properties are forecast to trade hands in 2023, a 9.8 per cent decline from 2022. The downward revision to sales was predominantly due to fewer expected sales in Ontario and British Columbia. These more than offset an upward revision to the forecast for activity in Alberta.
The national average home price is forecast to decline by 3.3 per cent on an annual basis to $680,686 in 2023. National home sales are forecast to rebound by 9 per cent to 490,257 units in 2024 as interest rates get closer to, and eventually start, trending down and housing markets make a turn back towards their long-term trends. This forecast would place activity close to the pre-pandemic 10-year average.
“The major risk to this forecast remains what happens with the data that the Bank of Canada is eyeing and what that means for its key policy interest rate between now and next spring,” CREA cautions.
“The current assumption is either no more hikes, or at most one more, along with some indication from the BoC at some point that the next move will likely be down,” CREA stated.
But no one really knows.
BoC’s decision to hold its policy rate steady at 5 per cent on Dec. 6 didn’t clarify things.
“The bank is continuing its policy of quantitative tightening,” it said. “Governing Council is still concerned about risks to the outlook for inflation and remains prepared to raise the policy rate further if needed.”
In B.C.’s Lower Mainland, the BCREA is forecasting a slight contraction in sales and prices 2023, before sales rise and prices appreciate in 2024.
In Greater Vancouver, it estimates that composite home prices will rise 1 per cent in 2024 to $1.29 million.
In the Fraser Valley, the BCREA expect prices to fall 7 per cent in 2023 before increasing 3 per cent in 2024 to $1.05 million. In Chilliwack, it forecast prices to fall 8 per cent in 2023 and rise 1 per cent in 2024 to $755,000.
“In 2024, we anticipate sales to recover in each region, with growth of from 3 per cent to 8 per cent,” according to the BCREA.
Alberta and Prairies
Prices in Alberta are expected to outperform the rest of Canada in 2024, with a forecast gain of 4.8 per cent compared to 2023. Modest price growth in the 1 per cent to 2.5 per cent range is forecast for other Prairie provinces in 2024, according to the CREA forecast.
The Prairies are poised to outperform the nation in 2024, said a new housing report by TD Economics.
“Moving forward, the same factors that have been helping to prop up markets in the Prairies over the past year are likely to remain in place,” TD economist Rishi Sondhi said in the report. “This relatively resilient demand backdrop should also lead price growth in the Prairies to outperform the rest of Canada in 2024.”