Learn the Top Ontario Real Estate Trends for 2023

What to Expect From the Ontario Real Estate Market in 2023

If you're thinking of buying or selling real estate in Ontario during the following year, you're probably curious to know what the future holds for the Ontario real estate market. It's a complex industry with some big dollar values on the line, so the more information you have about what's likely to happen, the better you'll be to turn the market to your advantage as a buyer or seller.

Housing demand and prices have always fluctuated from year to year. Still, the COVID-19 pandemic brought some significant unexpected changes to the Ontario real estate market—proving once again that housing market forecasts are certainly not written in stone. That being said, it's a good idea to look at what the experts have to say and what they expect when it comes to an Ontario housing market forecast for 2023.

That's why the Morison Insurance team put together this summary of what realty experts anticipate from the Ontario housing market in the coming year. We'll explain what's on the horizon and the numbers behind those predictions, as well as offer a look at what may be on the table for the Ontario real estate market in 2024.

Ontario Housing Market 2023: Prices are Falling

The most significant Ontario real estate market trend currently underway and expected to continue well into 2023 is falling home prices. This is because sales have stagnated, and more homes are available on the market than last year. With fewer buyers wanting to scoop up every property on the Ontario real estate market, sellers have no choice but to lower prices to attract attention. Buyers are waiting and watching to see what happens as prices continue to trend downward.

Affordability Likely Won't Improve Until the End of 2023

The obvious inference is that if prices are decreasing, affordability is increasing. However, it's important to remember that affordability is determined by three main factors: the buyer's income, the sale price of the property and the prevailing rates of interest. In their article "The Market Has Turned: Home Prices Will Continue to Fall in Quebec and Ontario," Desjardins notes that because the latter two factors move in opposite directions, decreasing prices don't necessarily signal increased affordability. However, there is a glimmer of good news for buyers in that regard—Desjardins expects home prices to continue falling over the course of 2023 and expects mortgage rates to finally start going down toward the end of the year, causing an improvement in affordability around the end of 2023.

Heading Toward a More Balanced Ontario Real Estate Market

For the last couple of years, the Ontario real estate market has been a hot seller's market, with interest in buying real estate increasing dramatically in 2020 and causing an inventory shortage that caused prices to skyrocket. Overbidding became the norm in an overheated market as buyers struggled to get their foot in the door of almost any property they could find before it was snapped up and off the Ontario housing market. 2023 promises a more balanced Ontario real estate market as inventory rises, prices drop, and buyers can afford to be more selective.

What is a Balanced Real Estate Market?

The Ontario real estate market is considered balanced when the supply of available properties and the demand for housing (or, in other words, the number of prospective home buyers) are more or less the same. This means that buyers and sellers have an equal opportunity to get what they want from a real estate transaction. In a market that favours sellers, there's not enough supply and house prices go up as buyers are forced to accept paying more for less. In a market that favours buyers, there are far more properties than potential buyers, which allows buyers to be choosy, causing price drops. A balanced Ontario real estate market sits right in the middle of those two scenarios—real estate prices are competitive. Still, buyers must be willing to make compromises to get most of what they're looking for.

Canada and Ontario Real Estate Markets By the Numbers

  • An estimated 532,545 properties are expected to change hands on the Canadian MLS Systems by the end of 2022, according to the Canadian Real Estate Association (CREA), representing a decline of 20% from 2021's numbers.
  • CREA predicts national home sales to decrease further in 2023, dropping 2.3% to 520,156 homes sold.
  • CREA expects the national average home price to remain fairly steady from 2022 to 2023, shifting upward slightly by around +0.2% for a national average of about $722,000.
  • Desjardins expects home prices to decrease in the Ontario real estate market by 24%.
  • Despite that, Desjardins predicts that prices in Ontario at the end of 2023 will still be about 15% higher than before the COVID-19 pandemic.

Ontario Real Estate Market Peaks and Valleys in 2021 and 2022

Ontario is Canada's most populous province, which means a very high number of real estate transactions are completed here annually—but not all cities and regions in Ontario are subjected to precisely the same ups and downs when it comes to the Ontario real estate market. When we take a look at WOWA's Ontario Housing Market Report, specifically the Historical Average Home Prices in Ontario chart, it becomes clear that while Ontario's foremost real estate centres have all seen some fluctuations in the period of time between January 2021 and October 2022 that, do mirror each other, certain cities saw the most dramatic changes.

Brampton topped the Ontario real estate market charts in January 2022 with an all-time, record-high average sold price of $1,367,444. It was just slightly ahead of the curve, as the GTA, Ottawa, Hamilton, Mississauga and London all hit their own personal all-time high average sold prices in February 2022, with Toronto peaking in April 2022. Every one of those cities saw significant increases during that time period, but some were more drastic than others. For example, the GTA's average sold price in January 2021 was $967,885. By February 2022, it had reached $1,334,554, a 38% increase. On the other hand, Ottawa had an average sold price of $587,892 in January 2021 and increased to $752,442 by February 2022, a 27% change.

Fortunately for prospective home buyers, the Ontario real estate market increases ground to a halt early in 2022 for most cities. The average sold prices decreased quite a bit until July 2022, when they levelled out and remained on a reasonably even keel through the rest of summer and autumn, returning to a general range just a bit higher than what we saw throughout 2021 but still significantly higher than the prices in 2020. Toronto's average sold prices have seen the most ups and downs throughout the last two years, and it hasn't been relatively as steady as other places in the latter part of 2022. From Toronto's peak average sold price of $1,243,070 in April 2022, it decreased 18% to $1,019,100 in July 2022 and has bounced back a bit since then, landing at $1,093,097 in October 2022.

Sneak Peek at the Ontario Real Estate Market in 2024

Now that we know more about what to expect from the Ontario real estate market in 2023, it's only natural to wonder what 2024 has in store for us. It stands to reason that the further into the future we go, the more confusing and vague the predictions get. Hence, it's hard to say exactly what will happen more than a year from now—but that hasn't stopped some economic experts from making a few educated guesses about what will happen in 2024.

In their Provincial Housing Market Outlook, TD Canada expects that 2024 will bring lower inflation rates and some household income growth, increasing demand from prospective home buyers and driving average housing prices upward somewhat. However, prices are expected to remain below their pre-pandemic level. In addition, TD Canada predicts that price increases will be restrained in British Columbia and Ontario precisely due to challenging affordability levels.

Trust Our Expert Insurance Brokers With Your Changing Home Insurance Needs

Hopefully, this summary of the housing market outlook in 2023 has given you some insight into what to expect from the Ontario real estate market in the coming months. If you're planning on buying or selling property, your insurance needs will change. Home insurance is a major consideration during the home-buying process, so it makes sense to consult with your insurance broker early on and get the advice you need to find the perfect home for you and your family—or the perfect investment to grow over the coming years. Count on the reliable team of brokers at Morison Insurance to find the suitable insurance options for you, so you can have the peace of mind that comes with knowing you are protected against financial loss no matter what life sends your way.

This content is written by our Morison Insurance team. All information posted is merely for educational and informational purposes. It is not intended as a substitute for professional advice. Should you decide to act upon any information in this article, you do so at your own risk. While the information on this website has been verified to the best of our abilities, we cannot guarantee that there are no mistakes or errors.

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