Canadians optimistic that the housing market could regain balance, but affordability and inventory challenges highlight widespread impacts for consumers, real estate industry and broader economy
- 32 per cent of Canadian homebuyers and sellers are optimistic about the housing market moderating and regaining balance in 2023
- One in five Canadian homebuyers and sellers endorse new building developments that address the missing middle gap (22 per cent)
TORONTO and KELOWNA, BC, Feb. 22, 2023 /CNW/ — Amid a fluctuating economic environment, Canadian homebuyers and sellers are optimistic that 2023 could yield a more-balanced market, according to RE/MAX Canada’s 2023 Industry Trends Report. The report examines key economic and transactional trends that are likely to impact Canadian homebuyers and sellers, and the broader real estate industry this year.
According to a Leger survey commissioned by RE/MAX Canada as part of the report, most Canadians have at least one concern related to their homebuying or selling journey this year (59 per cent). Unsurprisingly, the highest-ranking on the list are the rising cost of living and inflation (34 per cent), followed by a lack of affordable housing options in their community (25 per cent), and the rising cost of rent (25 per cent).
Beyond the implications on Canadian homebuyers and sellers, these various housing-related factors will have a trickle-down effect on the real estate industry and the broader economy. According to Statistics Canada, the share of contributions from the Real Estate and Rental and Leasing (RERL) sector to Canada’s gross domestic product (GDP) has grown considerably in the last two decades, with up to 1 in 5 GDP dollars now generated from RERL in some provinces. Nationally, RERL is the largest contributor to the Canadian economy, at 13.5 per cent.
To view the full interactive report, please click here.
“For the real estate industry this year, a moderating market could mean some major shifts in how brokers run their business. We may start to see some consolidation as brokerages adapt to the economic slowdown. On an individual level, part-time agents could have a harder time progressing, as they may not be able to meet the needs of Canadians, or their brokerages. And one-on-one, personalized meetings with clients will be more important than ever before,” says Christopher Alexander, President, RE/MAX Canada. “This year, the industry needs to be focused on client service, education, and transparency in order to best serve clients.”
Looking beyond the transactional impacts on consumers, real estate companies, and the housing industry, the challenges felt in Canada’s housing market could likely touch other industries as well. According to RE/MAX Canada, this includes impacting employers’ and companies’ ability to attract new workers who may find it difficult to secure housing; local communities’ ability to attract and retain new businesses to support economic growth due to rising office rental prices, lack of availability, and more.
“The potential wide-spread impacts of our housing crisis can be mitigated, but challenges need to be tackled in a coordinated, strategic effort by all levels of government. I encourage visionary thinking and solutions that may include reforming municipal zoning laws to allow for a greater diversity of housing; expanding capacity for laneway developments; and using available land to drive housing supply in a manner that doesn’t compromise climate adaption and mitigation efforts,” says Alexander. “For that to happen, some tough decisions need to be made.”
Canadians strongly believe that addressing the affordability and supply crisis should be among the most important priorities for governments across the country (66 per cent). Additionally, 41 per cent feel that removing zoning and development red tape is a key measure to improve housing supply and something they hope will continue to expand.
“Our severe lack of supply in every town, community, and city across the country, seeps into almost every facet of the lives of Canadians. Not only are their housing options being impacted, but a tighter housing market may compromise job prospects, among other things, placing even greater urgency on governments and housing industry experts to address Canada’s affordability crisis,” says Elton Ash, Executive Vice President, RE/MAX Canada. “While we wait on these longer-term solutions to be implemented, Canadians should stay informed and work with experienced real estate professionals that can help them navigate the challenges of affordability, neighbourhood liveability, climate risks and zoning realities, among other factors, so that they may make the best buying and selling decisions for their unique situation.”
Regional Industry Insights
RE/MAX brokers and agents were asked to provide a local perspective on the issues impacting their markets, including the Greater Vancouver Area, the Greater Toronto Area, Edmonton, Winnipeg and Halifax.
The top trends anticipated to impact Greater Vancouver Area’s housing market in 2023 include higher interest rates, the mortgage stress test and low inventory, which is compounded by looming demand from move-over buyers and the influx of new immigrants to the city.
Successfully navigating the market this year will mean, “forgetting the noise and looking at your own personal situation,” says Tim Hill, real estate advisor at RE/MAX All Points Realty. “Make a real estate decision based on how it will benefit you and your family. If it makes sense, go for it. If not, don’t follow the herd. Working closely with your REALTOR® to advise on key considerations and factors specific to your own goals will now be more important than ever before. You should be asking your REALTOR® to provide you with the latest news and counsel around these key factors, specific to your own situation.”
The Greater Toronto Area is also likely to feel the impact of the rising cost of living, increased demand from a growing population, unemployment status, the mortgage stress test and housing diversification as it relates to “the missing middle.” With the higher cost of living hobbling first-time homebuyers’ capacity to buy, rental prices are also hitting new highs.
When it comes to immigration, Canada is rightly welcoming record numbers of new Canadians. However, the added demand is expected to drive up both residential sale and rental prices unless more housing inventory is added to the market.
“Rising interest rates, inflation and a precarious economy have been a topic of discussion for more than a year now, but what remains the most pressing and elusive trend is our chronic lack of housing inventory across Canada, especially in larger urban centres such as the GTA,” says Cameron Forbes, broker, RE/MAX Realtron. “We need our municipal, provincial and federal politicians to collaborate more strategically and creatively to address the problem, or risk it overshadowing the market until we come to responsible and sustainable solutions that will actually deliver.”
Similar to some of Canada’s larger markets, the rising cost of living is a primary concern in Edmonton; however, unique to the region is the growing demand from inter-provincial migration, as Canadians continue to search for pockets of affordability across the country. According to a local RE/MAX broker in Edmonton, this is likely to put further strain on an already-limited housing supply.
“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,” says John Carter, broker and owner, RE/MAX River City. “Aside from the guidance we can provide on an ongoing basis, in order to truly help Canadian homebuyers and sellers achieve their goals, it’s critical that we look at effective, collaborative and visionary ways to increase housing supply across all levels of government.”
While Winnipeg’s market is likely to experience many of the same factors that are expected to impact other regions surveyed, higher taxes are also likely to be top of mind in 2023.
“Winnipeg is unique in that it’s currently experiencing rising taxation levels, in addition to all of the other economic challenges facing the housing market. It’s one more housing obstacle Winnipeggers need to overcome,” says Akash Bedi, broker and owner, RE/MAX Executives Realty, Winnipeg. “While we wait for governments to implement a national housing strategy to boost Canada’s supply of affordable housing, my advice for buyers this year is to assess their own individual situations, and work with the right professionals to help evaluate next steps that are right for them. For sellers, I advise that their property is priced and marketed according to current market conditions; and when reviewing sold comparables, be open to adjustments. Flexibility is important.”
While cost of living remains top of mind in Halifax, red tape impeding development and “missing middle” housing is a prominent consideration this year. Together, these factors have contributed to stifling accessible and affordable housing options in a market that is already facing limited supply.
“While there’s trepidation in the market right now, there are still pockets of affordability available in Halifax, and throughout the province,” says Ryan Hartlen, broker, RE/MAX Nova. “For homebuyers and sellers alike, I advise them to seek out the right professionals to help them navigate all their options. This is especially critical while we wait on longer-term, more sustainable solutions that will support improving inventory levels and ultimately, affordability, not only in Halifax, but across the country.”
Additional key insights from the Leger survey:
- For 21 per cent of Canadians, anticipated changes/tighter restrictions to the mortgage stress test have encouraged them to make a real estate move sooner than originally planned in 2023
- 66 per cent of Canadians believe that protecting the environment (i.e. Greenbelt in Ontario) is essential for our quality of life in the long-term
- 47 per cent of Canadians believe technology could become more important than ever in real estate transactions
- Investments into public transportation expansions (such as new subway lines) are a priority factor for 38 per cent of Canadians as they think about their homebuyer/selling journey, and may impact their homebuying decisions in the future
Leger is the largest Canadian-owned full-service market research firm. An online survey of 1,554 Canadians was completed between January 20-22, 2023, using Leger’s online panel. Leger’s online panel has approximately 400,000 members nationally and has a retention rate of 90 per cent. A probability sample of the same size would yield a margin of error of +/- 2.5 per cent, 19 times out of 20.
About the RE/MAX Network
As one of the leading global real estate franchisors, RE/MAX, LLC is a subsidiary of RE/MAX Holdings (NYSE: RMAX) with more than 140,000 agents in almost 9,000 offices with a presence in more than 110 countries and territories. RE/MAX Canada refers to RE/MAX of Western Canada (1998), LLC, RE/MAX Ontario-Atlantic Canada, Inc., and RE/MAX Promotions, Inc., each of which are affiliates of RE/MAX, LLC. Nobody in the world sells more real estate than RE/MAX, as measured by residential transaction sides.
RE/MAX was founded in 1973 by Dave and Gail Liniger, with an innovative, entrepreneurial culture affording its agents and franchisees the flexibility to operate their businesses with great independence. RE/MAX agents have lived, worked and served in their local communities for decades, raising millions of dollars every year for Children’s Miracle Network Hospitals® and other charities. To learn more about RE/MAX, to search home listings or find an agent in your community, please visit remax.ca. For the latest news from RE/MAX Canada, please visit blog.remax.ca.
Forward looking statements
This report includes “forward-looking statements” within the meaning of the “safe harbour” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as “believe,” “intend,” “expect,” “estimate,” “plan,” “outlook,” “project,” and other similar words and expressions that predict or indicate future events or trends that are not statements of historical matters. These forward-looking statements include statements regarding housing market conditions and the Company’s results of operations, performance and growth. Forward-looking statements should not be read as guarantees of future performance or results. Forward-looking statements are based on information available at the time those statements are made and/or management’s good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. These risks and uncertainties include (1) the global COVID-19 pandemic, which has impacted the Company and continues to pose significant and widespread risks to the Company’s business, the Company’s ability to successfully close the anticipated reacquisition and to integrate the reacquired regions into its business, (3) changes in the real estate market or interest rates and availability of financing, (4) changes in business and economic activity in general, (5) the Company’s ability to attract and retain quality franchisees, (6) the Company’s franchisees’ ability to recruit and retain real estate agents and mortgage loan originators, (7) changes in laws and regulations, (8) the Company’s ability to enhance, market, and protect the RE/MAX and Motto Mortgage brands, (9) the Company’s ability to implement its technology initiatives, and (10) fluctuations in foreign currency exchange rates, and those risks and uncertainties described in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission (“SEC”) and similar disclosures in subsequent periodic and current reports filed with the SEC, which are available on the investor relations page of the Company’s website at www.remax.com and on the SEC website at www.sec.gov. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made. Except as required by law, the Company does not intend, and undertakes no duty, to update this information to reflect future events or circumstances.
SOURCE RE/MAX Canada
For further information: For more information please CONTACT: Daniela Recio, [email protected], 705-896-9801; Danielle Scott, [email protected], 416-909-5185; Lydia McNutt, [email protected], 416-797-0473