As a sign of the times, Royal LePage has adjusted its national home price forecast downward.
There’s no denying that home prices have softened considerably throughout the year. And they likely won't rise any time in the near future.
READ: GTA Home Prices Fall Annually in September, For the First Time Since 2018
According to the Royal LePage House Price Survey released today, the aggregate price of a home in Canada increased 3.3% year over year to $774,900 in the third quarter of 2022. On a quarterly basis, however, the aggregate price of a home in Canada decreased 4.9%, the second consecutive quarterly decline recorded. A majority of the Canadian markets experienced quarterly declines in the third quarter. Of the report's 62 regions, only four markets posted a quarterly aggregate home price increase in the third quarter (St. John's, Charlottetown, Montreal South Shore, Saskatoon).
Royal LePage is now forecasting that the aggregate price of a home in Canada will decrease 0.5% in the fourth quarter of 2022, compared to the same quarter last year.
This forecast has been revised downward from the previous quarter. The revision reflects an expected flattening or modest decrease of prices throughout the remainder of the year, according to the report.
Row of modern townhouses in Vancouver, Canada
"September did not bring the typical seasonal lift in the number of homes trading hands in this country, a clear indication that our housing market continues to adjust to higher borrowing costs," said Phil Soper, President and CEO of Royal LePage. "Home prices follow sales volume trends, which means we will see further softening in the final months of the year. Our revised outlook has national prices at just below where we ended 2021, erasing the gains made in the first quarter of 2022."
When broken out by housing type, the national median price of a single-family detached home rose 2% YoY to $806,100, while the median price of a condominium increased 6.1% YoY to $566,100. In the third quarter, the aggregate price of a home in Canada recorded an increase of 25.4% over the same period in 2020, and 21.5% over the same period in 2019.
"Home sales volumes have fallen in the face of economic uncertainty and rising rates, but so too have the number of properties available to purchase. With demand and supply falling in tandem, there is limited downward pressure on prices. Canadian home values should end the year well above pre-pandemic levels, retaining much of the gains made during the real estate boom of 2020 and 2021," said Soper.
Notably, the Greater Montreal Area posted a quarterly decline in its aggregate home price for the first time in more than five years, down 5.3% in the third quarter of 2022. This follows similar declines seen in the greater regions of Toronto and Vancouver, beginning in the second quarter.
"While Greater Montreal's real estate market proved more resilient than the country's two other largest urban centres in the spring, the region saw a material decline in sales activity during the summer, as buyer demand dwindled in the face of subsequent interest rate hikes. Sales activity in the country's largest urban areas remains constrained as global policy makers tackle the scourge of inflation," added Soper.
Meanwhile, major centres in the Prairies and Atlantic Canada also began to show price depreciation in the third quarter, although Calgary and Edmonton posted more moderate declines due to their relative affordability and strong migration from other provinces, according to Royal LePage.
In the ever-dramatic Greater Toronto Area (GTA), the aggregate price of a home increased 2.1% YoY to $1,098,100 in the third quarter of 2022. On a quarterly basis, the aggregate price of a home in the GTA decreased 5.95; the second consecutive quarterly decline recorded. Broken out by housing type, the median price of a single-family detached home decreased 0.6% YoY to $1,344,700, following record-high price gains in 2021. Meanwhile, the median price of a condominium increased 8.7% YoY to $701,300 in the third quarter of 2022.
On the west coast, the aggregate price of a home in Greater Vancouver increased 2.4% YoYto $1,250,200 in the third quarter of 2022. On a quarterly basis, the aggregate price of a home in the region decreased 4.7%; the second consecutive quarterly decline recorded. Broken out by housing type, the median price of a single-family detached home increased 3.6% YoY to $1,710,600, while the median price of a condominium increased 7.0% to $745,900 during the same period.
The sad reality is that a softening of prices doesn't make home ownership anymore attainable. A recent Royal LePage survey found that almost one in five Canadians (19%) have postponed or deprioritized their home buying plans this year, due to the increased cost of living, including higher interest rates and rising inflation
