We continue to see buyers become more active after a very sluggish ten months in 2022. In March 2023 we experienced tighter market conditions compared to March 2022. Buyers are coming off the sidelines and we are seeing bidding wars once again. Although we saw an increase in new listings in March compared to February 2023 – listings remain well below the March 2022 levels. The lack of inventory persisted, resulting in buyers competing for homes and driving up prices compared to February 2023.
 

March Supply and Demand Challenge Continues

Although we experienced an increase in new listings in March the supply of homes available for sale continued to remain relatively low. In March 2023 new listings were down -44.3% compared to March 2022 but were up 25% compared to February 2023. However, in many regions listing inventory continued to be at historically low levels. The low inventory of new listings has resulted in buyers once again competing for homes resulting in multiple offers and bidding wars on these homes.

As a result, we saw that the average price increased by 1.2% compared to February 2023 but was still 14.6% lower compared to the historical record of March 2023. We are also starting to see the number of days on the market starting to drop from 33 in February to 27 in March 2023 an indication of a tightening market and properties selling quicker.

March Average Sale Price

As mentioned earlier, the lower inventory combined with more buyers coming out of the sidelines has resulted in rising prices compared to February 2023. The average sale price has increased by 1.2% compared to February 2023 but is down 14.6% compared to March 2022. Recent consumer polling suggests that demand for home ownership will continue to increase for the balance of the year.

 

Outlook

There is currently increased optimism that we are seeing a recovery in the real estate market. The Bank of Canada appears to be delivering on its commitment to pause overnight rate increases. Inflation has continued to come down.

I know that there is concern about the stability of the banking system. However, what is happening in the US banking system is unlikely to ripple over to our Canadian banks as our banks have high reserves and more stringent and conservative lending practices.

There is an expectation that inflation in Canada will continue to decrease and we may possibly start to see interest rate decreases towards the end of 2023 or as early as 2024. As a result, many buyers are seeing this as an opportunity and we are seeing more and more buyers getting engaged and actively searching for a home.

Great Opportunity for Buyers

Although we are starting to see bidding wars return to the real estate market to date they are not as aggressive as we saw in 2021 and the first two months of 2022.

In the past couple of months we are starting to see average sale price increases rather than the price decreases that we experienced in the last 10 months of 2022. 2023 is the year to buy a property. I caution buyers that are waiting to see if the market will “crash”. Trying to time the market can be dangerous.

My advice to buyers and particularly first-time buyers is to buy what they can manage and continue to save and build equity rather than paying a landlord’s mortgage. If you are a first-time buyer or an investor it is a good time to get more active in looking for that perfect property.

Conclusion

Overall, the real estate market in March was marked by low inventory, increased demand, and rising prices. It is expected that these trends will continue through the balance of 2023. I project that by 2024 there will be additional pressure on prices and demand will aggressively outpace supply. Buyers have been sitting on the sidelines and immigration continues to ramp up which will in 2024 result in aggressive bidding wars particularly once interest rates start to drop. 2023 is the year to purchase real estate.

Buy and sell your home or recreational property with Sylvia Smith. She specializes in residential and recreational real estate within the Greater Toronto Area, Parry Sound, and Muskoka. Whether you are a first-time buyer, an investor or you are looking for a cottage property, she provides a seamless experience and is committed to making clients’ real estate dreams come true while protecting their interests and providing integrity and client service. If you have any questions or are thinking of buying or selling, don’t hesitate to reach out to Sylvia Smith.