Will House Prices Drop?
Navigating the Canadian housing market can be a daunting task, and one of the most pressing questions that potential home buyers in Canada are asking is: will house prices drop? With so much uncertainty about what’s going to happen over the next few months and years, it pays to stay informed. In this article, we’ll take an in-depth look at what’s happening with real estate prices now – and how they may move in the future.
Will House Prices Drop in Canada in 2023?
The Canadian housing market has seen a correction in prices since hitting a peak in February of 2022, with average house prices dropping an average of $180,000 since then. This drop has been attributed to several factors:
- An increase in financial uncertainty following the COVID-19 pandemic;
- Rising interest rates that make financing more expensive;
- A decrease in foreign investment, partly due to new rules banning foreign home buyers.
Prices may continue to decline as these factors remain in play, though it’s impossible to definitively say whether or not this will be the case.
Understanding Current Market Conditions That May Indicate a Price Drop
The Bank of Canada raised interest rates seven times in 2022, bringing the key interest rate from 0.25% to 4.5%. The aim of this was to reduce inflation, but these rate hikes had the added effect of reducing the number of home buyers, further reducing demand and continuing to lower prices.
The number of new listings also plummeted in 2022, as many homeowners were reluctant to put their homes on the market due to lower resale values. This had a downward pressure on prices again, reducing demand for housing and keeping prices depressed.
Finally, economic uncertainty is making potential buyers hesitant to commit to buying a house, especially given the risk of further rising interest rates.
Average Home Prices: A Year-Over-Year Comparison
According to the Canadian Real Estate Association (CREA), the average prices in Canada have dropped 13.7% from March 2022 to March 2023. To break that down by province:
|Province||March 2023||March 2022||YOY Change|
|Prince Edward Island||$334,900||$337,500||-0.8%|
|Newfoundland & Labrador||$272.600||$265,200||2.8%|
|no information available for Nunavut at the time of posting|
The most significant decline was in Ontario, which is not a surprise as it’s one of the most expensive housing markets in the county. However, there were two provinces that actually had a year-over-year increase! Looking specifically at the Edmonton real estate market, the average home price was $371,200 in March of 2023 and in March of the previous year, it was $402,300 showing a drop of 7.7%.
Are House Prices Likely to Rise Again?
The Canada Mortgage and Housing Corporation (CMHC) is predicting further price drops in 2023 but doesn’t think that prices will return to pre-pandemic levels. They are expecting prices to bottom out in 2023 before housing markets start rebounding in 2024-25.
This represents a potential opportunity for anyone currently ready to buy, as you’ll be able to take advantage of the temporarily reduced prices and greatly increase the value of your home over the next few years.
The CMHC also expects that demand for housing will increase as the economy begins to recover, leading to a rise in house prices as more people enter the market. This is an encouraging sign for recovery, and also good news for real estate investors who should see the value of their investments grow alongside a big increase in the market for renters.
Are House Prices Dropping More in Edmonton Compared to the Rest of Canada?
House prices of all kinds are down in Edmonton in 2023, with the average price currently down 6% compared to last year. This is significantly better than the national average, which is down 14% over the last 12 months.
This is likely due to several factors: first, Alberta’s unemployment rate has been slightly lower than many other provinces in Canada, meaning more people have been able to keep their jobs and remain in the housing market. Second, there are more affordable housing options in Edmonton than in other places, making it easier for buyers to find something within their budget.
This makes Edmonton an extremely attractive market for home buyers, as you’ll be able to get a good deal on your home and have the chance to capitalize on any potential price increases in the future.
Is Now the Right Time to Buy a House?
It’s hard to predict exactly what will happen with house prices in the next few years, and everyone’s circumstances are unique. If you’re in a position to buy now, it could be a great opportunity – as long as you feel comfortable with your decision and have done research into the local market.
Related article: Is Now the Right Time to Buy a House in Edmonton?
As the economy begins to bounce back, house prices may start to rise again and the housing market could become more competitive – so if you’re interested in buying, it’s worth considering making an offer sooner rather than later.
Overall, the Canadian housing market is still very much in flux as we move into 2023 and beyond. Investment in real estate will likely prove to be wise – but always make sure you do your due diligence before committing to buying a house.
With the current state of Canada’s housing market, now could be a good opportunity to get a good deal on a new home or rental property. Taking this opportunity now could give you the head start you need to enter an incredibly competitive market. By doing a bit of research, you’ll be able to find the dream home or investment opportunity that works for you.
The real estate market can be a tricky and exasperating subject – but with some planning and effort, it may be easier than expected. If you need a little more help, give Sterling Edmonton a call for more information and begin your journey toward finding your ideal home.
About the Author:
At Sterling Homes, our mission is to provide the opportunity for affordable homeownership without compromise. Over the last 70 years, Sterling Edmonton has quickly become one of Edmonton’s most popular builders. We bring more than seven decades worth of exceptional customer service, superior design and unparalleled craftsmanship to the greater Edmonton area. As a member of the Qualico Group, Sterling Homes focuses on greater Edmonton’s finest family communities, while being able to offer some of the region’s most family friendly prices thanks to volume purchasing power for materials, trades and land. This has not only made Sterling one of Edmonton’s bestselling, move-up builders, but also one of the industry’s most respected home providers. It is through our uncompromising commitment to our customers that we proudly deliver the Sterling Advantage – that’s why each and every home we build includes a 10-year home warranty, a completion guarantee and new home warranty excellence rating. Our Advantage is our pledge that, when you build your dream home with Sterling, we will deliver a timely, well-built home you’re sure to enjoy for years to come.
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