Housing Market Outlook, and Where Interest Rates Could be Headed

Real Estate 101

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This week’s top real estate stories.

By Jared Lindzon | 2 minute read

Oct 20

Every Friday, Wahi brings you the most important real estate stories from the past week.

It’s Officially a Buyer’s Market

A bleak outlook just got even bleaker, after the Canadian Real Estate Association (CREA) lowered its forecast for the Canadian housing market for the remainder of 2023 and into 2024. CREA says it had to lower its expectations after accepting that interest rates would remain “higher for longer” than originally anticipated. Its updated prediction now suggests a 9.8% drop in nation-wide home sales this year compared to last, along with a 3.3% drop in prices. Looking ahead to next year, CREA expects a 9% increase in sales and a 1.5% increase in prices in 2024.

“While economists are optimistic that rates won’t go any higher, they also warn that they might not be lowered any time soon, either, as inflation is still well below the Bank’s stated target of between 1% and 3%.”

The Housing Market Is Getting Worse for Both Buyers and Sellers

Canada’s housing market continues to defy all reason and logic by being somehow bad for both buyers and sellers. While prices continue to drop — a trend that is notably bad for those who sunk their savings into property — affordability is also declining — which is also bad for people looking to buy — thanks to higher interest rates. A recent analysis into 10 major real estate markets by Ratehub.ca found every single one experienced a drop in prices between August and September, and an increase in income required to purchase a home under the current stress test requirements.

Toronto: Crane City

If the Toronto skyline appears to be more line than sky these days it’s because the city is home to the most cranes in North America, by a wide margin. The latest Crane Index by construction consultants Rider Levett Bucknall found Toronto had 240 in operation in Q3, far outpacing second-place Seattle, with 45. That’s double the city’s pre-pandemic benchmark of 121. In fact, Toronto and Boston are the only cities of 14 included in the report seeing more cranes, not less. Of the 50 new high-rise projects launched in Toronto in the last six months, 41 are residential.

The Housing Boom You Probably Can’t Afford

Canada is having a real estate sales boom, but unless you’re shopping for a home over $4 million, you probably haven’t noticed. Despite rising interest rates and a generally bleak housing market for the rest of us, the country’s wealthy experienced something of a real estate boom this summer, especially among detached single-family homes. According to a new report by Sotheby’s International Realty, homes over $4 million in Toronto saw a 32% jump this summer over last — 37% among single family homes. Meanwhile, Vancouver luxury sales jumped 96% overall — 145% if you don’t count condos.

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Another Pause in Rate Hikes?

Good news for people who don’t like to pay more for things: according to Statistics Canada, inflation is once again trending downwards, with September’s annualized 3.8% increase trending lower than August’s 4%. As a result, experts are optimistic that summer rate hikes will give way to an autumn pause when the Bank of Canada announces its next interest rate decision next week. While economists are optimistic that rates won’t go any higher, they also warn that they might not be lowered any time soon, either, as inflation is still well below the Bank’s stated target of between 1% and 3%.