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What You Need to Know About the Current Canadian Housing Market

Tuesday, 31 January 2023

Canada Real Estate Trends

Canada’s housing market is still feeling the effects of the ongoing COVID-19 pandemic. Data from the Canadian Real Estate Association (CREA) showed that sales activity declined by 13.3% in December 2020 compared with December 2019, to a seasonally-adjusted level not seen since 2013. This decline was led by lower sales activity in British Columbia, Ontario and Quebec. 

At the same time, the average home price fell 8.4% year-over-year in December to $502,434. This was driven by a steep decline in prices of single-detached homes (-10%). Prices for condos also declined (-2%) while other types of housing saw modest price increases. The CREA noted that while activity has fallen significantly, it is still well above levels seen in the wake of the 2008 financial crisis. It also highlighted that there are signs of recovery in some regions, with sales activity rising in Alberta and Saskatchewan. 

Overall, the new data from CREA shows that Canada’s housing market continues to be affected by the pandemic, with sales activity and prices both down significantly compared to a year ago. As restrictions continue to evolve and people adjust to the new normal, it will be interesting to see where Canada's housing market goes from here. 

Volatility in Toronto and Vancouver Real Estate Markets

The real estate market in Canada's two largest urban centres, Toronto and Vancouver, have particularly been impacted by the recent economic correction. In Toronto, typical home prices have fallen 18.4% from their March 2022 peak, amounting to an average loss of nearly $245,200 per household. Similarly, in Vancouver prices are down 10.5% from the April 2022 peak, representing an average loss of over $133,100 for owners. While these numbers may not seem as dramatic as some other cities in Canada have experienced, they still amount to a significant financial hit for many individuals and families. 

It's also worth noting that Vancouver hadn't seen quite the same large-scale rise in home prices that Toronto had experienced in the previous two years, so much of the city's decline can be attributed to these pre-existing market conditions. Nevertheless, it serves as a warning that no city is completely insulated from economic flux. Homeowners should be sure to consider their personal financial situation before making any decisions regarding their property investments. 

Overall, the correction in Canada's two largest cities serves as a reminder of just how volatile and unpredictable the real estate market can be. For residents of Toronto and Vancouver, it's important to understand the risks associated with buying and selling property in order to make informed decisions about their investments. 

Sources: Toronto Real Estate Board, Real Estate Council of British Columbia

How to Make Smart Property Investment Decisions in a Lower Market

The property market across Canada has been under intense downward pressure over the past few years. With prices falling and mortgage rates remaining low, many homeowners are wondering if now is the right time to invest in real estate. To make smart property investment decisions in this lower market, it is important to understand both the risks and opportunities associated with investing in a declining market.

Understand Market Risks

The most important thing to keep in mind when considering investing in a lower market is that there are risks associated with any property purchase. While prices may currently be low, they may also continue to decline or remain stagnant for an extended period of time. To minimize your risk, it’s important to research current market trends and understand how they can affect your potential investments. Additionally, you should be aware of any possible pitfalls such as zoning restrictions or neighbourhood crime rates that could impact the return on your investment.

Explore Opportunities for Growth

Another way to make smart property investment decisions is by exploring opportunities for growth. Just because the overall market is declining does not mean that all properties will depreciate in value; some areas may still offer good returns on investment due to population increases or infrastructure improvements. By researching these types of growth opportunities, you can ensure that you are making sound investments even in a lower market. Additionally, consider investing in properties with features that will remain desirable even if prices drop further such as newly renovated buildings or large lots near desirable amenities.

Consider Alternative Investments

While real estate remains one of the most reliable forms of long-term investments, it might not be the best option for everyone during this uncertain economic climate. Depending on personal financial goals and risk tolerance levels, investors may want to explore alternative options such as stocks or mutual funds instead (or in addition) to traditional real estate investments. By diversifying among various asset classes, investors can help reduce their overall risk while still participating in strong growth opportunities when they arise.

The Advantages of Home Ownership

When it comes to investments, there are many advantages that come with buying your own property. Furthermore, when you pay off your mortgage, you will have 100% equity in your home whichever find yourself in a financial bind. On top of this, as an owner, you have complete control over any changes or improvements that need to be made on the property; something which tenants may not have. Even as house prices rise and fall in different markets across Canada, historically speaking real estate has always proven to be a safe bet with consistent returns over time.

Investing in real estate is still a great long-term investment that many Canadians can make. According to a recent survey, 73% of Canadian homeowners said that they still believed home ownership was the best way to secure their financial future.

Final Thoughts on Canada’s Housing Market

While the Canadian housing market is not expected to recover until 2024, many experts are advising potential home buyers and sellers to be cautious and to pay close attention to the current trends. With rising interest rates driving up monthly payments for homeowners, it's important for those considering selling their properties or buying a new one to take into account the additional costs that may be involved. Additionally, potential buyers should also be aware of the current supply picture in their desired market. If there is an abundance of homes for sale already on the market, it's important to remember that additional competition may further drive down prices and make it more difficult to find a competitively priced home. On the other hand, if there is a lack of homes on the market, buyers should be prepared to act quickly when they find a property that meets their needs.

Ultimately, anyone considering buying or selling a home in Canada should remain aware of the current housing market trends and consult with financial advisors and experienced real estate professionals to ensure they are making the best decisions for their individual circumstances. Plus, by staying abreast of economic trends and being aware of their own financial position, homeowners can protect themselves from potential losses and maximize the value of their property.

If you are also purchasing a new home or making significant renovations, contact a BIG broker today. Our BIG team is always here to find you competitive rates, answer any questions, or update your home insurance policy.

By: Elizabeth Stephenson