Positive signs have emerged despite January home sales hitting a 14-year low
Canada’s housing market slowdown has spilled into the beginning of 2023 with home sales in January hitting their lowest level for the month since 2009, according to the Canadian Real Estate Association (CREA).
The association said national home sales had dipped by 37% on a yearly basis and 3% month over month, with new listings also hitting a 23-year low for the month of January.
Still, green shoots could set to emerge for the national housing market. CREA’s senior economist Shaun Cathcart didn’t rule out the prospect of an uptick in activity in the coming months, with the spring market having the potential to “surprise” – especially in areas that have seen relative stability, or are beginning to stabilize, where home prices are concerned.
He said in remarks accompanying CREA’s news release that the apparent end of interest rate hikes for now could give buyers increasing confidence in choosing variable-rate mortgages, and that 2023 would represent “a good window of opportunity” to partake in a less frenetic housing market than the one that caught fire at the onset of the COVID-19 pandemic.
“The big question on everyone’s minds after last year was what will housing markets do in 2023?” says CREA’s Chair @JillOudil.
— CREA | ACI (@CREA_ACI) February 15, 2023
Get the highlights 👉 https://t.co/3qmXUC6Cr7 #CREAStats pic.twitter.com/6YtI2lEyji
How a calmer interest-rate environment could help the market
An optimistic outlook for the year was also shared by SafeBridge Financial co-founder and chief strategy officer Chris Karram (pictured top), who told Canadian Mortgage Professional prior to the release of CREA’s January statistics that the Bank of Canada’s approach on its benchmark rate was unlikely to be anywhere near as dramatic as in 2022.
“Personally, I do believe that we should see these rate hikes slow down, the unprecedented rate hikes that we saw last year and no-one could have predicted,” he said. “It’s one thing to predict that rates are going to go up – it’s another thing to predict that they were going to go up as quickly and aggressively as they did.
“And that was scary for a lot of people. I really don’t believe that we’re going to see anything close to that level of rate hikes this coming year.”
While the shock-and-awe nature of those rate increases may have stunned many Canadian borrowers last year, a growing number have adjusted to the new environment and are determined to push ahead with their homebuying plans after sitting on the sidelines in 2022, Karram added.
That’s been bolstered by the central bank’s apparent willingness to hit pause on rate hikes for now, assuming inflation and other economic indicators continue to play out as expected in the months ahead.
“I think realistically, Canadians – at least a number of them, not all of them – are starting to feel a little more comfortable with the current reality,” he said. “I think they’re getting used to where they’re at, and these changes that have happened [are] scary… Some are very cautious of that, but overall, this does not look to be a year of uncertainty the way it was last year.”
What do mortgage professionals need to focus on?
While this year is still likely to present its fair share of challenges, mortgage professionals and their clients now have an advantage in that they’ve become acclimatized to the current reality and are unlikely to face the same surprises as in 2022, the executive said.
For agents and brokers, a key strategy this year should be to build new practices into their daily lives that allow them to focus on things they can control, according to Karram, which would allow them to help more clients and add value to their service.
“As a result, that’s going to in the very least help them sustain their business, if not grow their business going forward,” he said. “So economically, I think it should be a lot more normal, or at least a lot less volatile than it was last year. But certainly, we’re not out of the woods.
“There’s a lot of uncertainty still, and a lot of questions that we won’t know the answer to until December next year. But we can certainly move forward and take control of what’s available to us, that’s for sure.”
What are you advising your clients about how the mortgage and housing markets are likely to evolve in 2023? Let us know in the comments section below.
