February 22 2023
Both buyers and sellers are in for an interesting 2023 with experts anticipating a “historic correction” for the year ahead. We spoke to our Director of Real Estate, Brett Stein to get his input on what we can expect for Canadian real estate in 2023. Here’s what he had to say.
The current state of the market
There’s a lot of uncertainty in the market right now. Canadians have been dealing with consistent rate hikes since March 2021 – the last one being this month with the key interest rate hitting 4.5%. The good news is that we can expect a conditional reprieve from the Bank of Canada – but no one should get too comfortable until we get confirmation that rate hikes will stop and then start to come down again.
Did I miss an opportunity to buy?
If you didn’t get into the market during the craziness of sub 2% rates and the home buying frenzy of early spring 2022, you may be suffering from a bad case of FOMO. Where some think they’ve missed out, I think there is actually a great opportunity. Home prices in certain areas have dropped significantly since the peak, and with less competition, opportunistic buyers have capitalized on some great deals. As I always say, “you date your rate and you marry your purchase price!”
Buying and selling your home in 2023
With less competition on the market, buyers may see an added bonus of more supply this coming year. With a record number of buyers getting into variable mortgages over the last few years, more and more homeowners are finding their monthly payments unaffordable with the latest rate hikes. This may cause many homeowners and investors to put their properties up for sale. If 2023 is the year you plan to buy, get in touch with a mortgage and real estate professional on our team at Homewise to learn how you can get pre-approved and find a home that’s within your budget. We’ll also educate you on how the decisions you make today can impact your financial future and affordability moving forward.
If you’re selling this year, the most important thing to do is to have a concrete plan in place with your real estate and mortgage professionals. Contrary to the classic sellers market, now is often the time to sell first, rather than to buy first. This is because in this changing market, values are not guaranteed and a quick sale is not always possible. If you are risk averse and have a tight budget, it may be best to guarantee yourself the sale, before you go ahead and commit to another property. Another big thing is to have realistic price expectations. Unfortunately, the days of February 2022 are over – with 20 offers per property and homes selling way over market value. We must realize that in order to sell in this market, you have to price fair and correctly. The last thing a seller wants is to be priced too high and sit on the market for months without any offers. This can put a red flag on your home for the next time you choose to sell.
Renting my home vs. selling my home
If you are a homeowner and can afford to hold a second property, you might consider turning it into a rental. Rental demand is on the rise due to unaffordable home prices. As well, Canada’s immigration plan targets a record-breaking 465,000 new permanent residents – many of whom will plan to rent. Typically, newcomers will rent for three to five years while they save money and build credit before purchasing a home in Canada. With average rent prices soaring at all time highs, this is a great opportunity for owners to gain some steady rental income as the market corrects itself. We are also seeing buyers gravitating towards multi-unit dwellings to be able to subsidize their mortgage with rental income.
It can be overwhelming to make decisions amid the current uncertainty in the Canadian real estate market. It’s extremely unpredictable and impossible to time – but stay the course! The best thing anyone can do is to stay informed about what is happening and continue to assess your options before making any moves. If you have any questions, we encourage you to reach out to our team at Homewise for more information.
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