On behalf of the MFR team, we would like to wish you and your family a safe, healthy and prosperous 2023!
To assist with any New Year Resolutions we would like to provide a free planning session to discuss the real estate market, new tax incentives, budgeting and any other topic to help guide you for the future.
Plus, you get a FREE Starbucks Gift card!
Here is a summary of our MFR 2023 Real Estate Forecast.
2023 – Q1 – Decrease of 1% – 3% in Toronto and 2% – 4% in GTA. Buyer’s market with a bottom hitting in February/March.
2023 – Q2 – Increase of 1% – 2% in Toronto and 1% – 3% in GTA. Balanced market with significant increase in listings and buyers coming back to market.
2023 – Q3 – Flat in Toronto and GTA. Balanced market with interest rates starting to come down.
2023 – Q4 – Increase of 2% – 4% in Toronto and 1% – 3% in GTA. To assist with the recession the Bank of Canada will start to ease policies to assist buyer’s to come back to the market.
Overall, we see the Toronto real estate market rebounding 2% – 3% and GTA 0% – 2% by the end of 2023.
Here are some of the big movers for 2023.
Interest Rates and Inflation
The major downfall of the 20% real estate correction in 2022 can be mostly attributed to interest rates rising significantly due to high inflation. There is a lot of uncertainty for 2023 but we forecast 1 more rate hike of 25 basis points then the Bank of Canada holding for 6 – 9 months. With a global recession potentially coming in the next 2 – 3 quarters they may be forced to start easing their policies which may lower interest rates by year end. We forecast inflation to drop to approximately 3% by Q3 which may build some more confidence in the markets.
Buyer Demand and Seller Supply
Buyer demand has plummeted to record lows due to high interest rates. A lot of money is sitting on the sidelines waiting for some indication to come back to the real estate market. We believe the bottom is coming soon by the end of February and a lot of buyers are waiting for the Spring market to find some good deals with mortgage interest rates stabilizing with some bank promotions to help buyers out. Seller supply will also increase this Spring as seller’s who have been on the sidelines may be forced to sell due to higher rates for mortgage renewals. This may be more of a traditional Spring market where we have a healthy balance of buyers and sellers in the market transacting at the new fair market real estate value with less disconnect in appraisals that we saw in 2022.
Global Recession and Immigration
Will 2023 be a short or long term recession for Canada? Most indicators point to a short term recession with employment and immigration at healthy levels. The significant increase in immigration for Canada for the next 5 years should keep demand high even with the foreign buyer ban. In the last recession the Canadian real estate market still held up since real estate is considered a safer investment relative to stocks and bonds. A recession may bring down inflation and interest rates long term so we may need to struggle for the short term to benefit for the future.
Please note the assessment above is based on personal opinions based on the MFR team’s daily real estate interactions, economist reports, brokerage comments and updates from other professionals.
To get a full report or book a free planning session, please email [email protected] or call me anytime at 416-705-2444.