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What can we expect from the housing market in 2023?

Housing activity picked up across the country in December after plummeting for much of 2022 due to climbing interest rates—a sign some take that the market is approaching a bottom.

There were 34,256 sales in the month, still down 39% from year-ago levels, but up 1.3% compared to November, according to data from the Canadian Real Estate Association. It was the second monthly gain in the last three months.

“Home resales are now gradually stabilizing in most parts of the country…” observed RBC economist Robert Hogue. “This is consistent with our view that a cyclical bottom is approaching—likely in early 2023.”

But the same can’t necessarily be said about home prices.

“It will take a little longer for prices to steady though,” he noted.

The average sale price fell to $626,318, down 12% year-over-year and 19% below the peak price reached in February.

The MLS Home Price Index, which adjusts for market composition, ended the year down another 1.6% in December, marking its 10th straight month of declines. On an annual basis, the HPI was down 7.5%.

RBC’s forecast has the HPI continuing to slide until the spring “at the earliest, as poor affordability continues to weigh heavily on buyers.”

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