Yes, the market has turned to become more difficult for sellers, and inflationary pressures continue to put upward pressure on interest rates; but the underlying fundamentals to our real estate market are strong. Over the long term, price growth should return. That being said, the Bank of Canada has set an inflation target of 2% per year, and has historically been successful in keeping inflation within this range. The Canadian real estate market has experienced significant growth in recent years, and many experts are predicting that this trend will continue in 2023. According to the Canadian Real Estate Association, the national average home price is expected to increase by 3.6% in 2023, with the strongest growth occurring in the western provinces. However, it is important to note that the real estate market can vary significantly from region to region, and it is always a good idea to research local market conditions before making any investment decisions. One reason for the expected growth in the Canadian real estate market is the relatively low interest rates that have been maintained by the Bank of Canada in recent years. Low interest rates make borrowing more affordable, which can drive demand for housing. However, it is important to note that interest rates are expected to start increasing in the coming years, which could impact the housing market. It is always a good idea to consider the potential impact of interest rate changes on your mortgage and overall financial plan.
Another factor contributing to the strength of the Canadian real estate market is the country’s strong economic fundamentals. Canada has a stable political and legal system, and a diverse and resilient economy. These factors make it an attractive place to invest in real estate. The country’s GDP has been growing consistently in recent years, and unemployment rates remain low. These indicators suggest that the economy is in good shape, which can provide a foundation for a healthy real estate market. Demographic trends are also driving demand for housing in Canada. The country’s population is growing, and the number of households is expected to increase by over 1 million by 2023. This increase in households will drive demand for both rental and ownership housing. The rental market in particular is expected to see strong demand in the coming years, as more Canadians opt to rent rather than buy a home. As of January 2023, the state of housing starts in Canada is strong. According to the Canada Mortgage and Housing Corporation (CMHC), the annual rate of housing starts in Canada has been steadily increasing since the beginning of 2021, and is expected to continue to rise in the coming months. This trend is being driven by strong demand for housing, as well as a robust economy. The CMHC also reports that the demand for new housing units is being driven by sustained continued population growth and household formation, as well as a need for rental housing. The rental market in particular is expected to see strong demand in the coming years, as more Canadians opt to rent rather than buy a home.
There are also a number of government initiatives in place to support the housing market in Canada. For example, the First-Time Home Buyer Incentive program provides financial assistance to eligible first-time home buyers, which can help to make homeownership more accessible. Additionally, the government has implemented measures to help stabilize the housing market, such as tightening mortgage lending rules to ensure that buyers are able to afford their homes. It is important to note that there are also potential challenges on the horizon for the Canadian real estate market. For example, some experts are predicting that the market may cool off in the coming years due to rising interest rates and other economic factors. Additionally, there are concerns about housing affordability in some parts of the country, particularly in larger cities where demand for housing is high. Overall, the prospects for the Canadian real estate market in 2023 are positive, with strong economic and demographic fundamentals driving demand for housing. While there are potential challenges on the horizon, such as rising interest rates, the market is expected to continue to grow in the coming years. As with any investment, it is important to carefully consider your own financial situation and risk tolerance before making any decisions about buying or investing in real estate.