Will Real Estate Prices Tumble in 2023?
We've seen home prices skyrocket over the past few years, leaving many to wonder if we're in a housing bubble. And if we are, will the bubble finally burst?
What exactly will 2023 bring when it comes to the real estate market in Toronto and the GTA?
Home Prices Will Bottom Out
Despite what we've seen over the recent past, home prices will bottom out sometime during the first half of 2023. In fact, we've already seen home prices dipping over the past few months, and they'll continue to do so for the first few months of this year until they finally plateau at low levels for a few months more.
Of course, the interest rate hikes that we've seen have been playing a role in the direction that home prices have recently taken. Even home sales activity has slowed as a result of these increasing rates, which have made it increasingly difficult for prospective homebuyers to get into the local market.
Thankfully, the Bank of Canada has said that rate hikes could slow down soon, even though it recently announced yet another rate increase. That said, if rate hikes do slow down, this could reduce mortgage interest rates and make it more affordable for homebuyers to buy a home.
Home Prices Will Pick Up Again in 2024
The year 2023 will likely see a slowdown in home prices, as mentioned, which should bottom out and remain at that point for a while. In fact, this year could be one of the weakest years in terms of home prices and sales activity since the early 2000s. However, home prices throughout Canada will probably start seeing a return to normalcy in 2024.
According to the Canadian Real Estate Association (CREA), home prices in the GTA were at $1,081,400 in December 2022 (the latest number recorded by CREA). That's down 8.9% since the same month the year before. It will be interesting to see what prices in the city will be like over the course of 2023.
Housing Availability Will Continue To Be An Issue
Another issue that has plagued the GTA housing market - and several markets across the country - is housing inventory. There simply isn't enough supply to meet demand.
Sellers are not putting their homes up for sale as much, and new housing starts remain slow. This could be due to the rapid increase in price of materials needed for new home construction, among other things.