Navigating the Winter Housing Market: A Buyer’s Dream in Ontario

The Canadian housing market has been cooling off in recent months, as interest rates and inflation have made it difficult to buy a home. This trend is expected to continue into the winter months, which is typically a slower time for the housing market anyway. As per a report published by CREA, in Canada, during the winter season of 2022-2023, new listings declined by 29.7%, home sales by 10.4% and home prices by 6.3%. However, it is important to note that in the last couple of years, this decline has become more pronounced due to inflation, interest rates and the affordability crisis.

Numerous prominent economists have offered their predictions regarding the impending winter's housing market performance. While the Bank of Canada anticipates a 3% decrease in home prices for the upcoming season, Norada Real Estate Investment presents a slightly more conservative estimate, forecasting a modest 5% decline.

As we head into the winter season, it looks like something special is happening for those who are thinking about buying. We are expecting the Bank of Canada to keep interest rates stable until December 2023, and anticipating a drop in home prices and new listings, while properties are taking longer to sell.

THE STEADY RATES

This is something we talked about in our report from October 6^th, 2023. Right after BoC decided to hold the rates steady on September 6^th, 2023, we saw an uptick in home sales by 3.2%. This was indicative of the trend that if BoC continues to hold the rates steady then most likely it will motivate many buyers to step into the housing market. This by all means is not surprising as the relation between interest rates and home prices is inverse.

When rates go up, Home prices go down,

When rates go down, Home prices go up

Currently, the interest rates are at the highest they have ever been in decades, and from July to October 2023, the average selling price in Canada has fallen by 7.5% and 8.2% in Ontario. Combine these drops with the upcoming winter market and you get a housing market which is just right for home buyers to step in.

According to Manoj Karatha broker of record for The Canadian Home, “It is highly unlikely that the Bank of Canada is going to raise the rates any further in 2023, and this has two significant implications. First, it provides a breathing room allowing the market to cool down and second buyers will now be in a better position as the market is completely in their favour, provided they know where to look and how much they can afford."

IT'S A BUYER’S MARKET NOW

Buyers and sellers are the two primary participants in all forms of the home-buying process. The dynamic between demand and supply dictates which side will hold the most amount of strength for prices. When demand outpaces supply, its the seller's market, when supply outmatches demand then buyers hold all the cards. With that in mind here are some facts,

In Ontario,

• No. of transactions from July to October have gone down by 14.5%

• The average selling price from July to October has gone down by 8.2%

• The average time it takes for a home to sell from July to October has increased by 21%

Yes, we are officially in a buyer’s market now which means home buyers who choose to enter the market now will hold all the negotiation power. This is an opportune time for those looking to purchase a home in Ontario, as the market has shifted in their favour, allowing for more favourable terms and deals.

According to Robin Cherian CEO of The Canadian Home, “I believe this winter season is going to be something special because there is a lot that has aligned for home buyers perfectly. You have steady rates, declining home prices and a market where you hold all the negotiation power. All it will take is timing and an expert realtor and you can grab the best deal this season."

DON'T JUMP IN JUST YET BUT DON'T WAIT TOO LONG

While your negotiation power and the winter's impact on home prices will affect the entire Ontario market, the location and the specific property you choose will still play a significant role. If you go looking for a resale detached home in the heart of Mississauga with an average budget chances are you will be disappointed. But if you look into cities like Kitchener , London and Niagara where home prices can be as low as $539K then you may find more affordable and attractive options within your budget. Or you can look into cities like Scugog , Uxbridge and Oshawa where home prices are still in the $700K-$800K range.

Wherever you choose to search, be prepared to act swiftly. As more buyers enter the market, the balance between supply and demand will gradually shift in favour of sellers. Many sellers avoid listing their properties during the winter season due to the traditionally slower market. If a surge in demand outpaces the available inventory, prices are likely to rise once more. So, think rationally and start looking into houses for sale but only after a consultation with an expert realtor.