Here we go again... another prediction for the real estate market.
Canada’s housing market could be facing its biggest downturn in recent history, according to a new report from RBC.
After the price of residential properties soared during the pandemic — with some of the most expensive regions experiencing increases of 50 per cent or more — Canada’s largest bank is predicting that national home prices could deflate by more than 12 per cent early next year.
That decline would be larger than any of the four corrections the Canadian housing market has experienced in the past 40 years, said Royal Bank of Canada economist Robert Hogue.
Home sales are expected to slump 23 per cent this year and 15 per cent next year, RBC said in its Friday report. That total decline — a drop of 42 per cent since early 2021 — would be higher than the 38 per cent decline the market faced in 2008 and 2009.
While economists have predicted a cool-down in the housing market for months, RBC’s forecast is among the most gloomy to come from one of the big Canadian banks.
Again, these are just predictions. Who are we supposed to believe?
Toronto is a cosmopolitan city ranked up there as a very desirable city to live in. Prices can only go so low in a market like Toronto, where demand remains high. Interest rates are still relatively low compared to historical standards. Prices have dropped rapidly from where they were in February/March. But they’re stabilizing at a lower level because the demand is still there, and inventory levels haven’t popped.
The big change for many sellers will be letting go of the price they were hoping to sell at. If you really need to sell, then waiting isn’t the best approach. Set aside your disappointment, make your home stand out, and get the best price you can. Besides, prices are still up year- over-year, so unless you bought your home at the very top of the market, it’s guaranteed to have appreciated over the last few years, and you’re still making money. The advice remains the same: if it’s the right time for you, then go ahead and sell. There are still buyers out there looking for their dream home.
The RBC report does end on a high, noting that this forecast is for a correction not a collapse. The unfolding downturn should be seen as a welcome cool down following a two year-long frenzy that put a huge financial burden on many new homeowners and made ownership dreams harder to achieve. RBC predicts that the correction should be over sometime in the first half of 2023.
