The Canadian housing market industry and consumers are showing favor towards new residential developments that focus on diversified housing. This has sparked optimism for a more balanced housing market in Canada. However, challenges related to affordability and inventory have significant impacts on consumers, the real estate industry, and the broader economy.
- In 2023, 32% of Canadian homebuyers and sellers are hopeful that the housing market will moderate and regain balance.
- 22% of Canadian homebuyers and sellers support new building developments that address the missing middle gap. This represents one in five individuals.
The RE/MAX 2023 Canadian Real Estate Industry Trends Report reveals that Canadian homebuyers and sellers are hopeful for a more balanced housing market in 2023, despite the fluctuating economic environment. The report analyzes the economic and transactional trends that are likely to impact the Canadian real estate industry and homebuyers and sellers this year.
According to a Leger survey commissioned by RE/MAX Canada, 59% of Canadians have at least one concern related to their home-buying or selling journey this year. The highest-ranking concerns are the rising cost of living and inflation (34%), followed by a lack of affordable housing options in their community (25%), and the rising cost of rent (25%).
These concerns related to the housing market have implications beyond consumers and will have a trickle-down effect on the real estate industry and the broader economy. Statistics Canada reports that the Real Estate and Rental and Leasing (RERL) sector’s share of contributions to Canada’s gross domestic product (GDP) has grown significantly in the past two decades, with up to one in five GDP dollars generated from RERL in some provinces. Nationally, RERL is the largest contributor to the Canadian economy, at 13.5%.
Christopher Alexander, President of RE/MAX Canada, predicts that a moderating housing market could bring significant changes to how real estate brokers operate their businesses. Consolidation among brokerages may occur as they adapt to the economic slowdown, while part-time agents may struggle to meet the needs of Canadians and their brokerages. Alexander emphasizes the importance of client service, education, and transparency in this year’s real estate industry.
The impact of the Canadian housing market challenges may extend beyond consumers, real estate companies, and the housing industry, and touch other industries as well. The challenges may impact the ability of employers and companies to attract new workers who may find it difficult to secure housing. Local communities may struggle to attract and retain new businesses to support economic growth due to rising office rental prices and lack of availability.
To mitigate the potential widespread impacts of the housing crisis, Alexander urges coordinated, strategic efforts by all levels of government. Canadians believe that addressing the affordability and supply crisis should be among the most important priorities for governments across the country. They also believe that removing zoning and development red tape is crucial to improving housing supply.
Elton Ash, Executive Vice President of RE/MAX Canada, highlights the severe lack of housing supply across the country, which impacts almost every facet of Canadians’ lives. Ash suggests staying informed and working with experienced real estate professionals to navigate the challenges of affordability, neighbourhood liveability, climate risks, and zoning realities.
Regional Industry Insights
To gain insight into the local impact of housing market challenges, RE/MAX reached out to brokers and agents across several regions, including the Greater Vancouver Area, the Greater Toronto Area, Edmonton, Winnipeg, and Halifax, for their perspectives on the issues affecting their respective markets.
Greater Vancouver Area, BC
RE/MAX All Points Realty’s Tim Hill suggests that for those navigating Greater Vancouver Area’s housing market in 2023, it’s important to tune out the noise and focus on personal circumstances. The top trends expected to impact the market include higher interest rates, the mortgage stress test, and low inventory, which are exacerbated by demand from move-over buyers and new immigrants. Hill advises that making a real estate decision based on personal benefit is key and that working closely with a REALTOR® to assess specific factors and considerations is more important than ever before.
Greater Toronto Area, ON
The Greater Toronto Area is set to be affected by a range of trends including the rising cost of living, increased demand from a growing population, unemployment rates, the mortgage stress test, and the need for more diverse housing options, including “the missing middle.” With the high cost of living, first-time homebuyers are finding it difficult to purchase homes, which has driven rental prices to record highs.
As Canada continues to welcome a growing number of new immigrants, the resulting demand is expected to drive up both residential sale and rental prices unless more housing inventory is added to the market.
Cameron Forbes, a broker at RE/MAX Realtron, notes that despite the discussion around rising interest rates, inflation, and the precarious economy, the most pressing and elusive trend remains the chronic lack of housing inventory across Canada, particularly in larger urban centres such as the GTA. Forbes believes that more strategic and creative collaboration is needed from municipal, provincial, and federal politicians to address the problem and come up with sustainable solutions.
Edmonton, AB
Edmonton, like other major Canadian housing markets, is grappling with the rising cost of living. However, it faces an additional challenge in the form of growing demand from inter-provincial migration as Canadians seek more affordable pockets across the country. A local RE/MAX broker predicts that this is likely to further exacerbate the already limited housing supply in the region.
“Navigating the most influential trends this year will be challenging. I recommend interviewing at least three REALTORs® before hiring one, thoroughly scanning their client reviews and social media presence, and asking for relevant past performance statistics. Pricing guidance when selling is also critical in 2023, with many listings not accurately priced,” advises John Carter, broker and owner at RE/MAX River City. “Apart from the guidance we can provide on an ongoing basis, it’s essential that we explore effective, collaborative, and visionary ways to increase housing supply across all levels of government to truly help Canadian homebuyers and sellers achieve their goals.”
Winnipeg, MB
Winnipeg’s housing market is expected to face many of the same challenges as other regions, along with an added concern of rising taxation levels. According to Akash Bedi, broker and owner of RE/MAX Executives Realty in Winnipeg, this will create one more obstacle for buyers in the city. While waiting for a national housing strategy to increase the supply of affordable housing, Bedi advises buyers to assess their personal situations and seek guidance from professionals, while sellers should ensure their property is priced and marketed appropriately for current market conditions. Flexibility will be key when reviewing sold comparables.
Halifax, NS
In Halifax, the cost of living remains a primary concern, but the hindrance of development due to bureaucratic processes and the lack of “missing middle” housing options are also major factors affecting the housing market. As a result, limited housing supply has become a more prominent issue, making it difficult for people to access affordable homes.
“Despite current market concerns, there are still affordable options available in Halifax and the province,” advises Ryan Hartlen, broker at RE/MAX Nova. “For both buyers and sellers, seeking professional assistance in navigating their options is essential. This is particularly important while waiting for long-term solutions that will address inventory levels and affordability, not only in Halifax but across the country.”
