Bankers more bullish than realtors in price outlook

January 18, 2023



While a recent Point2PointHomes national survey showed that housing costs have increased 14 per cent in the past five years, despite the recent dip in prices, analysts have different opinions on where prices are headed this year.
Lenders, it appears, are much more bullish than realtors.
According to Point2Point, the average monthly housing cost is now $1,498, and the survey found that Canadian homeowners spend 24 per cent of their income on shelter, or almost $300 more per month than renters.
Housing costs are not uniform across the country: 12 of the 15 most-expensive housing markets are in Ontario and the rest are in B.C.
So where are home prices headed in 2023: lenders are much less confident than those involved in real estate sales.
The Canadian Real Estate Association forecast on January 16, 2023, that Canadian home prices will decline 5.9 per cent this year, compared to 2022, to $662,1003, while total home resales are forecast to fall 0.5 per cent, year over year.
Royal LePage, a major residential broker, forecasts a mere 1 per cent decline in prices, year-over-year. “We expect year-over-year comparisons to show progressively less price decline as the year goes on, with small week-to-week improvements in the third and fourth quarters, allowing Canadian home values to end 2023 essentially flat to where we are today,” according to company statement.
Re/Max is forecasting a 3.3 per cent average home price drop in 2023, with recovery seen in the second half of the year.
RBC Royal Bank, though, is forecasting both an 8.5 per cent decline in prices year-over-year, in 2023, and for prices to fall 14 per cent from their 2022 peak in the first quarter. “It will likely take years to fully reverse the tremendous [price] deterioration that took place since 2021,” RBC said in its outlook.
TD Bank is even more pessimistic. It predicts average housing prices will fall 10.7 per cent in 2023 compared to 2022, adding “Weaker sales activity should push prices even lower in the near-term. However, our forecast calls for average prices to only partially retrace their pre-pandemic gains when they eventually bottom.”