Understanding the Real Estate Market: Insights & Predictions for Homebuyers and Homeowners
Tags: Real Estate Prediction, Crash, Real Estate MARKET uPDATE, REAL ESTATE INSIGHTS, BEST VAUGHAN REALTOR, VAUGHAN REAL ESTATE, hOUSES FOR SALE IN VAUGHAN, REAL ESTATE Prices
The past three years have been marked with unprecedented changes and uncertainties, and the housing market has been no exception. Despite the onset of the pandemic, the housing market saw a surprising surge instead of the expected slowdown. The current slowdown in the market is a result of the medical pandemic's impact, not an economic slowdown
During the pandemic, demand for housing continued to outpace supply, which was further exacerbated by the need to move. However, the lockdown period resulted in many families saving more than ever before. This combined with supply issues and pent-up spending has led to inflation that has gotten out of control. The Bank of Canada has been raising interest rates in an effort to bring inflation under control.As a realtor, I understand the concerns of homeowners and buyers about the state of the real estate market and what to expect in the coming year. I would like to assure everyone that Canada's market is not on the verge of a crash. A crash in the market typically follows a housing bubble, and that is not the case here.
In this blog, I will share my insights and predictions for the real estate market to help homeowners and buyers make informed decisions. With a clear understanding of the market's current state, you can make informed choices and maximize your real estate investment.
What is a housing bubble?
A housing bubble, also known as a “real estate bubble” occurs when the price of homes rises at a rapid and unsustainable rate. This can happen due to factors such as speculators entering the market, causing a surge in demand and driving up prices. In Canada, the last housing bubble occurred in the 1980s, leading to a severe recession and many homeowners losing their jobs. Since then, the real estate market has experience ups and downs.
Are We in a Housing Bubble?
In recent years, the Ontario housing market has seen record-high selling prices, particularly during the pandemic, as a result of a shortage in supply and an increase in demand. However, the market has since become more balanced, with prices dropping from the February 2022 peak. . At the onset of the pandemic, the housing market came to a grinding halt in mid-March 2020 and the spike in demand for homes met by a supply shortage created the perfect environment for price growth.
Crash in 2023? It’s Highly Unlikely.
Despite some speculation of a potential housing market crash, it is highly unlikely to occur in 2023. With pent-up demand still present and the continued increase in immigration, the market is expected to remain stable. The Bank of Canada's recent interest rate hikes may lead to a slight decrease in prices, but the market is still in a balanced state.
Although listing inventory is no longer at record lows, it is still in short supply. However, many buyers are still sitting on the sidelines and as a result, we are in a balanced market in many Ontario communities. Prices have definitely dropped from the February 2022 peak and homes are now taking a bit longer to sell.
Given the pent-up demand that still exists, and that it is unlikely that we will experience a dramatic influx of real estate needed for a housing market crash – and even if we did see a dramatic increase in new listings we still have many buyers to absorb the new listings. Plus the increase in immigration will keep demand high for some time to come.
What’s Coming in 2023
As we have experienced through the last 6 months of 2022 the housing market is now in a more balanced market. Prices have dropped from the February 2022 peak and if interest rates continue to increase we may still see prices drop off a bit. However, the Bank of Canada alluded during the last rate increase announcement that they may put a pause on rate increases to determine the impact on inflation.
Different communities are impacted differently depending on the supply of listings on the market so some are still in a softer seller’s market, while others are in a balanced market and others are in a buyer’s market. In communities where listing inventory is higher, more significant price reductions may continue to take place in 2023.
While interest rates have increased the increases have been offset by a decrease in house prices. But this doesn’t mean that sellers should panic as the demand for real estate is still there and the demand for housing is still there and homes are still selling. Buyers that continue to look for a home are serious and ready to buy. Those selling a home will net less on the sale of their home than they would have in early 3033, most sellers also need to buy so they will also pay less for their next home. If your situation is different and you have concerns – reach out and let’s talk. I am here to help in any way I can.
Challenging market conditions and a still-present global pandemic have added challenges and uncertainty for home buyers and sellers. Market conditions also vary by the community so now more than ever it is essential to work with a trusted, professional Realtor who can guide and support you through the buying and selling process.
I commit to presenting the facts to my clients and being completely transparent and as honest as possible and am here to help. I do not believe that we are in a housing bubble about to burst. The biggest challenge we now face is getting first-time buyers into the housing market. With the increased population, the growth in demand for housing is not expected to slow down any time soon.
