The 2024 forecast for the Canadian real estate market, as analyzed from predictions by the Canadian Real Estate Association (CREA), paints a picture of fluctuating market dynamics with regional variations.
National Sales and Price Trends
Sales Forecast for 2023 and 2024: National home sales in Canada have shown stability since the summer of 2022, indicating that the market has adjusted to the impact of rising interest rates and economic uncertainty. For 2023, CREA forecasts a marginal decline in property sales by 1.1% compared to 2022, with approximately 492,674 properties expected to be sold. However, this figure was later downgraded to 464,239 properties, a 6.8% decrease from the previous year. In contrast, 2024 is anticipated to witness a significant rebound, with sales projected to increase by 13.9% to approximately 516,043 units, signalling a return towards long-term trends.
Average Home Prices: The national average home price is forecasted to decline by 4.8% in 2023 to around $670,389, influenced by factors like interest rates and regional market variations. This decline is expected to be followed by a recovery in 2024, with average prices increasing by about 4.7% to approximately $702,200. Nevertheless, these figures are subject to change due to ongoing market dynamics.
Regional Variations and Influences
Alberta and Ontario: Notable regional adjustments in the forecast include a downward revision for Alberta’s home sales due to a weaker-than-expected first quarter in 2023, while Ontario saw an upward revision thanks to a stronger start to the year.
B.C.’s Lower Mainland and the Greater Toronto Area: These regions contributed to an upward compositional shift in the national average price forecast for 2023, reflecting their higher-priced markets.
Risks and Factors Affecting the Forecast
- Housing Supply Challenges: A critical risk to the forecast is Canada’s ongoing housing supply issue, with new listings at 20-year lows. This scarcity could affect sales forecasts negatively and exert upward pressure on average prices.
- Economic Conditions: The potential severity and duration of a predicted mild recession in 2023 could significantly influence the market, potentially leading to longer-lasting shifts.
- Interest Rates: The Bank of Canada’s interest rate policies, particularly any pauses or increases, will continue to play a crucial role in shaping buyer sentiment and market activity.
- Foreign Buyers’ Ban: Set to end in 2025, this ban’s conclusion could increase market competition and fuel price growth, especially if housing supply shortages continue.
- Affordability and Supply Dynamics: Lower home prices in the current market may lead to increased demand, especially from younger buyers who are currently priced out. This pent-up demand, combined with a constrained supply, particularly in new home construction, could drive prices higher in 2024.
While the Canadian real estate market is expected to experience some contraction in 2023, a rebound in both home sales and prices is predicted for 2024. This forecast, however, hinges on a myriad of factors, including regional market dynamics, economic conditions, interest rates, housing supply issues, and policy changes. Buyers and sellers are advised to closely monitor these evolving conditions to make informed decisions.
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