A new bearish report from TD Bank (TD) forecasts that the average home price across Canada
will decline between 20% and 25% by the first quarter of next year (2023).
The report comes as home prices already show signs of decreasing as borrowing costs rise in
tandem with interest rates.
The latest data from the Canadian Real Estate Association (CREA) showed home prices
nationwide hit $629,971 in July, down 5% from $662,924 a year earlier. On a seasonally
adjusted basis, prices averaged $650,760, a 3% drop from June of this year.
TD Bank’s forecasted price drop would represent an unprecedented decline going back to the
late 1980s when the data first started being tracked.
However, TD says that the worst possible outcome for home prices will likely be avoided
because of several factors that will help underpin demand and prices, such as growing incomes,
increased household savings, and low inventories in both the new and resale housing markets.
TD Bank also forecasts that the number of home sales in Canada will fall 35% by the first
quarter of 2023.
CREA forecast in June of this year that the national average home price in Canada will increase
by 10.8% on an annual basis to $762,386 by the end of 2022 and hit $786,252 in 2023. The
agency reported that July home sales in Canada totaled 37,975, down 29% compared with a
year ago.
