The Greater Toronto Area (GTA) real estate market will start to turnaround this year, after experiencing a downward slide or market correction in 2022.
Approximately 496,000 properties are forecast to trade hands via Canadian MLS systems in 2023, amounting to only a 0.5% decline from 2022.
It is still expected to remain quite difficult for many first-time buyers to enter the housing market until mortgage rates are lower than they are today. That being said, some buyers are expected to come off the sidelines once they have more certainty interest rates have topped out. Others will likely find 2023 the first opportunity in some time where they’re not having to compete with multiple offers.
Home prices nationally are forecast to see modest gains in the third and fourth quarters of 2023; however, values are expected to remain lower than the same periods in 2022.
Comparing prices to the previous year, the first quarter of 2023 should show the deepest decline in home values due to the record setting start to 2022, when home prices reached historically high levels. After that, expect year-over-year comparisons to show progressively less price decline as the year goes on, with small week-to-week improvements in the third and fourth quarters, allowing Canadian home values to end 2023 essentially flat to where the market is today.
The aggregate price of a home in Canada is forecast to be 12% lower in the first quarter of 2023, compared to the same quarter in 2022, reflecting a 2.4% decline over the fourth quarter of 2022. In the second quarter, the national aggregate price is forecast to be 7.5% lower year-over-year, and remain virtually flat on a quarterly basis. In the third quarter, homes are expected to be 2% lower year-over-year, reflecting a 0.7% increase on a quarterly basis. And in the fourth quarter, the national aggregate price of a home is expected to end the year 1% below the same quarter in 2022, an increase of 0.8% quarter-over-quarter.
The real estate market turnaround is not expected to be evenly distributed across the country. In the GTA, the aggregate price of a home in the fourth quarter of 2023 is forecast to decrease 2% year-over-year to $1,056,734. During the same period, the median price of a single-family detached property is expected to decline 2.5% to $1,329,413, while the median price of a condominium is forecast to increase modestly by 1% to $701,243.
It’s worth noting that while home prices have come down from the record highs recorded in the first half of 2022, they remain well above pre-pandemic levels. The projected aggregate price of a home in Canada in the fourth quarter of 2023 is expected to be 15% above the last quarter of 2020, and 18.4% above the fourth quarter of 2019.