RBC Economics outlines 2023 possibilities
The housing price correction in Canadian markets seems to be “broadly easing” during the early parts of 2023, according to Robert Hogue of RBC Economics.
“For the most part, Canada’s housing markets started 2023 the same way they ended 2022: quietly,” Hogue said in a new analysis. “Early results for January from local real estate boards generally show persistent weak activity and price declines.”
The Bank of Canada’s rate hikes, which saw the benchmark policy rate surge from 0.25% to 4.5% between March 2022 and January 2023, had an unprecedented impact on the housing sector, “sending many to the sidelines (no longer qualifying for a mortgage) and significantly shrinking the budget of others,” Hogue said. “High-priced markets and areas that experienced tremendous run-ups earlier in the pandemic are seeing the most dramatic downswings.”
Still, the same results also showed that the monthly rates of decline for home sales and prices have slowed in Ontario (including Toronto) and British Columbia (including Vancouver), in particular.
“This development, along with our expectation that the Bank of Canada has completed its rate hike campaign, point toward a cyclical bottom around spring or summer—though the timing may vary from market to market,” Hogue predicted.
However, the recovery is likely to be “very gradual” to begin with.
“We expect the massive increase in interest rates will continue to hold back activity and compress purchasing budgets for some time,” Hogue said.
