Affordability was the greatest market driver during the second quarter, says RE/MAX Canada
Upward momentum served to mitigate the decline in the value of detached housing over the first half of 2023, but average prices were much lower this year compared to 2022 levels in most neighbourhoods throughout the Greater Toronto Area, Greater Vancouver, and the Fraser Valley, according to a new report by RE/MAX Canada.
“Anxious homebuyers were quick to identify the bottom of the market and jumped in with both feet in the second quarter of the year,” said Christopher Alexander (pictured), president of RE/MAX Canada. “The short burst of home-buying activity clearly underscored the resilience of the housing market, but the lack of inventory available for sale curtailed any real momentum from building.”
Alexander cited the appetite for affordability as the greatest market driver during the second quarter.
“Move-up buyers recognized an opportunity to make a move amid lower overall values in the GTA, Greater Vancouver and the Fraser Valley,” Alexander said. “Trade-up activity has pushed the share of detached home sales to 44.7% in the Greater Toronto Area and 29.3% in Greater Vancouver, both up slightly from one year ago.”
RE/MAX noted that in these regions, demand was the strongest for detached homes valued under $2 million.
Canadian Real Estate Association (CREA) senior economist Shaun Cathcart noted that while a bumpy ride could be in store in the coming years, home prices were likely to continue climbing.https://t.co/q0c0yiWKRl#mortgagenews #industrytrends #homesales #houseprices
— Canadian Mortgage Professional Magazine (@CMPmagazine) June 22, 2023
Housing affordability is still a few years away
Tony Stillo, of Oxford Economics, said in a recent analysis that residential prices will likely reach a peak this summer, followed by a 10% decline projected for early 2024.
“By the middle of next year, we are looking for prices to have fallen from their 2022 peak by about 20% to 25%,” Stillo said.
At the same time, Stillo is expecting the lack of affordability to worsen in the near term as the Bank of Canada’s policy rate is likely to remain at its 22-year high of 5% for a prolonged period.
“It will be a couple of years before we see improvements in affordability,” Stillo said. “We don’t think housing affordability Canada-wide will be within the reach of the average household until 2027, once prices settle down to a lower level, incomes grow, and interest rates [gradually] return to a somewhat lower level.”
