Two high-profile real estate experts said that the real estate market will witness more stability in 2023, noting that the current year will not show a significant move or change compared to 2022.
Many buyers and sellers are feeling uncertain about their decisions in 2023, whether they sell or buy their houses, due to the big changes that happened in 2022 and whether there will be a new interest rate hike by the Bank of Canada. However, two experts said that 2023 will not be the same because of many actors, mainly the shortage of supply.
“No doubt the significant market changes between the early months of 2022 and the rest of the year, have provided us with some signs of how the market could look like in 2023,” Iyad Amro, commercial and residential broker, told MEDIAinTORONTO.
“We have seen some stability in the last quarter, as the low supply has supported the significant interest rate increase. So, the rate of declines in prices was lesser in the last quarter than it was in the second and third. In my opinion, we will witness more market stability in 2023, with a possibility of some price increase,” he said. “I am basing this opinion upon two factors, first, is the increase in the number of newcomers that are expected during the year. second, the interest rate hikes will not be at the same level as we have seen last year.in addition to that, a quick market recovery might be seen, as soon as the inflation rate starts to respond to the measures being implemented by the bank of Canada .let us not forget that supply will remain an issue in the coming years, while demand will be in the uptrend.”
Regarding the recent decision by the government to ban foreign real estate purchases for two years, Amro said “I do not see such measures will seriously impact the market trend, as foreign buyers-according to statistics Canada- owns less than 2.5% in Ontario, and less than 3.5% in BC. Such market share will have little to do if compared to other major factors that are already in play.”
He said that many economists believe that interest rate is not the only tool to deal with this type of inflation. Other measures should be taken to support that. “This leads us to conclude, that bank of Canada might be more conservative in any future interest rate hike decisions. No doubt any rate increase will create more pressure on the market, and will delay market recovery,” he added.
The broker recommended sellers keeping properties and delaying selling could be the right decision, provided that the owners or sellers own the luxury of doing so, and can still afford their payments, but he underlined that this could be an opportunity for the buyers to make their move, taking into consideration that they will be paying high-interest rates for some time before they can see the upward trend. “They should consider their financial situation now and in the near future before they make the purchase. Otherwise, staying in a rental residence is safer than taking the risk of buying under financial stress.”
Another real estate expert agreed with Amro. Dina Elghandour, a famous broker said “Canadian Real estate Market in 2022 has been adversely affected by few reasons just like the high inflation rates, lack of supply, and continued Interest rates hikes. I do believe that the Market in 2023 will not show a significant move or change compared to 2022, especially from last march, we will be having the same Performance as in 2022, the reason behind that is backed by the shortage of supply and the high-interest rate which prevents many potential buyers to qualify for mortgage approval or afford high monthly installments. So we are under the same situation which is the lake of supply and controlled demand.”
Regarding the foreign buyers ban, she said that she agrees when it puts a price limit on soaring house prices which in turn will not allow a lot of families in acquiring their own home, and also agree when it limits property flipping and trading, while she does not agree for the implication for this decision on the whole real estate industry Canada world-wide. “Keeping in consideration this decision will prevent the flow of fresh cash to the country and the direct foreign investment,” Elghandour said.
“No one can confirm when the interest rate hikes will continue, this is based on several factors affecting the economy, the major one is the political tense and war in eastern Europe between Ukraine and Russia even though its noticeable that we saw some signs of cooling inflation in some areas and spots all over the world which might be a good signal for interest rates in the coming period.”
She also agreed that it is recommended for the buyers to start buying even with high-interest rates as this will be only for a limited time period as this will be backed by the decrease in the purchase price of the unit, in other words, they might be paying a higher interest rate for a limited period of time and saving by buying lower property price.
“From the Sale Side, I don’t believe that is a good decision based on the current time as long as they are not under pressure to sell their house, this is not the optimum price to sell,” she said.