Navigating the Canadian Real Estate Market: A Comprehensive Fall 2023 Outlook

As the vibrant hues of summer fade, real estate professionals across Canada are gearing up for the autumn season, a period historically pivotal for housing market activity. The Fall 2023 landscape is marked by a complex interplay of economic forces, including persistent inflation, fluctuating interest rates, and evolving inter-provincial migration patterns. This creates an environment where both anticipation and caution define the sentiment from coast to coast.

Realtors, acting as frontline observers, possess invaluable insights into the nuanced dynamics of their local markets. To provide a comprehensive overview, Real Estate Magazine consulted with leading agents, brokers, and team leaders from key Canadian cities. Their perspectives offer a detailed forecast for what buyers, sellers, and investors can expect in the coming months.

Regional Insights: A Province-by-Province Look at Canada’s Autumn Housing Market

Ottawa, Ontario: A Stable Trajectory Amidst Rising Rates

Matt Richling, New Purveyors, Re/Max Hallmark Realty Group Ltd.

In Ottawa, the fall market of 2023 is anticipated to mirror the activity levels seen in 2022, particularly concerning unit sales. Last year, from September to December, a period characterized by rising interest rates, Ottawa experienced a significant 34.9% decrease in unit sales compared to the five-year average (2017-2022). However, 2023 tells a slightly different story.

After a sluggish start to the year, Ottawa’s market has shown resilience. Since May, unit sales have recorded a 9.0% increase compared to the same May-to-August period in 2022, defying continued interest rate hikes. The city is currently on pace for approximately 16,000 transactions for the year, a modest rise from the 15,549 sales recorded last year. Furthermore, average home prices have been steadily climbing since January, indicating underlying market strength.

Looking specifically at the upcoming autumn months, unit sales are projected to remain consistent with 2022 figures, or potentially even slightly higher. This includes an estimated 1,076 units sold in September, 982 in October, 846 in November, and 601 in December. For prospective buyers, these months traditionally represent opportune times, as September, October, and November rank as the 6th, 7th, and 8th lowest months respectively in terms of average sale prices. This seasonal dip is often attributed to the winding down of the busy summer season, as both buyers and sellers shift focus towards back-to-school preparations. Prices typically continue to soften as colder weather sets in and the holiday season approaches.

Toronto, Ontario: Navigating Uncertainty and Market Rebalancing

Ara Mamourian, Managing Partner, The Spring Team

Toronto’s fall housing market outlook remains shrouded in uncertainty as both buyers and sellers grapple with the implications of rising interest rates. While some market commentators suggest that the Bank of Canada’s recent rate hold signals a robust fall market, Ara Mamourian offers a more cautious perspective.

The temporary hold on interest rates might indeed spur a flurry of increased activity in September, as buyers potentially rush to lock in rates before further anticipated hikes. However, many industry experts predict another rate increase when the Bank of Canada reconvenes in October, which could significantly temper any newfound market momentum. Overall, Mamourian does not foresee dramatic gains or declines in Toronto’s urban home prices this fall. Instead, he views the market as being in a crucial rebalancing phase following several years of frenetic activity.

In this rebalanced environment, buyers are gaining a slight edge in negotiation, while sellers are compelled to adopt more competitive pricing strategies. With inflation still significantly above the 2.0% target and ongoing economic uncertainty, the Bank of Canada may continue to use rate hikes as a tool to cool demand. For buyers, elevated rates inevitably translate into reduced purchasing power. Therefore, working closely with lenders to secure the most favorable mortgage rates is paramount. While increased inventory offers more selection, decisive action remains critical when the right property emerges.

Listing agents are advised to encourage sellers to price their homes realistically from the outset. Overpricing can lead to properties lingering on the market, forcing price reductions over time – a less effective strategy than a competitive initial price. A significant wildcard for Toronto this fall is the potential for an increase in distressed sellers entering the urban market due to rising mortgage costs. While Toronto homeowners have historically shown resilience, some have experienced mortgage payment increases of up to 70% in recent months. A further rate hike could push more owners to sell. Consequently, supply levels will be a critical determinant of price stability. Mamourian suggests closely monitoring both supply volume and the underlying motivations of sellers, looking for signs of distress.

Despite the challenges, Mamourian believes Toronto residents with established homes and investments will largely continue to ride out market fluctuations by adopting a long-term view. While unpredictability will persist through the fall, strategic action rather than panic-selling in response to short-term shifts is recommended.

Winnipeg, Manitoba: Steadfast Growth in a Seller’s Market

Jennifer Queen, The Jennifer Queen Team

Winnipeg consistently distinguishes itself as a stable and predictable real estate market, often eschewing the dramatic headlines of larger metropolitan centers. Its market typically progresses along a steady upward trajectory, a trend that has largely characterized the past two decades. Since 2004, Winnipeg has firmly remained a seller’s market, consistently demonstrating remarkably high absorption rates, even in the face of rising interest rates in 2022.

The resilience continues into 2023. August saw MLS sales increase by 2.0% compared to the previous year, with a concurrent 2.0% rise from July. With the Bank of Canada’s decision to maintain the overnight rate, this upward momentum is expected to endure. A notable factor contributing to Winnipeg’s appeal is the decline in vacancy rates, which has exerted upward pressure on average rents, pushing them above the national average. Interestingly, despite rising rents, the average sales price for a residential-detached home in Winnipeg remains approximately half the national average. This affordability, coupled with strong rental yields, has significantly boosted the allure of buying in Winnipeg for both local residents and out-of-province investors seeking value.

While the broader market has thrived, Winnipeg’s condominium market was an exception for much of the last decade, experiencing declines or stagnant sales. However, this segment is now undergoing a significant resurgence, showing nearly twice the sales volume observed pre-pandemic. Condo sales prices have surged by 5.0% this year and now stand 10% above the five-year average. This renewed strength is anticipated to continue, offering long-awaited equity gains for condominium owners, mirroring those in the residential market.

Unfortunately for buyers, the seller’s market conditions are expected to persist through Fall 2023, reflecting the familiar patterns of the last two decades. High absorption rates, steady yet measured increases in average sales prices, and the omnipresent potential for bidding wars will continue to define the market. For Winnipeg, a “slow and steady” approach continues to be the winning strategy for sustained market health.

Regina, Saskatchewan: Low Inventory Fuels Strong Sales

Brin Werrett, Managing Broker, Coldwell Banker Local Realty

In Regina, the dominant narrative remains a combination of persistently low inventory and robust unit sales. While rising interest rates might be prompting some current homeowners to delay moving, the market is experiencing a significant influx of out-of-province buyers. Many of these newcomers are individuals who have either sold homes in more expensive markets like Ontario and British Columbia or have grown frustrated with the competitive conditions there, finding Regina an attractive, more affordable alternative.

Regina’s “months of supply” — a key indicator of market balance — has plummeted to under three months. This tight supply environment is occurring concurrently with record-breaking unit sales. August, for instance, saw unit sales nearly 25% higher than the city’s ten-year averages for the month. With fewer than 1,000 active listings across the city, buyers often find a severely limited selection, especially when focusing on popular neighborhoods. For example, in Greens on Gardiner, a newer, sought-after family-friendly neighborhood with a benchmark price of $463,400, there are currently only three single-detached homes listed under $500,000. This scarcity is driving demand towards attached homes and condominium markets (condo properties accounted for 21% of August sales) and spilling over into neighboring rural communities.

With a relatively small pool of 439 realtors in Regina, agents are preparing for what is expected to be a busy fall, extending into the first quarter of 2024, which is traditionally the city’s busiest buying season. While interest rates remain a critical factor, agents are also closely monitoring the benchmark price, which has surprisingly decreased month-over-month despite the strong unit sales. The key question for the fall and beyond is how long this trend will continue before a market correction pushes prices upward in response to sustained demand and limited supply.

Edmonton, Alberta: Affordability and Migration Drive Unprecedented Strength

Taylor Hack, Team Leader, Hack&Co, Re/Max River City

Edmonton’s real estate market continues to defy expectations, demonstrating remarkable strength fueled by its compelling affordability and a significant surge in net migration. As interest rates climb, Edmonton has become an increasingly attractive destination for individuals and families seeking economic opportunities and a higher quality of life at a more accessible price point. This growing interest is evidenced by Edmonton’s recognition as the most searched major city on Realtor.ca in Canada, signaling its rising profile among prospective homebuyers nationwide.

A primary catalyst for Edmonton’s market performance is its undervalued real estate. With a benchmark price of approximately $443,700, significantly lower than Calgary’s $685,100, Edmonton presents an appealing alternative for those relocating to Alberta. The province’s strong economic conditions, particularly driven by a rising demand for oil, are creating increased employment opportunities that further bolster the housing market. Furthermore, Edmonton’s condominium market is steadily recovering, marked by decreasing vacancy rates and a notable uptick in rental prices, adding another layer of investment appeal.

Throughout 2023, low inventory levels have been a defining characteristic of Edmonton’s market, reaching their lowest point in over a decade. This acute scarcity of available properties has led to multiple offer situations becoming increasingly common, underscoring a demand from buyers that significantly outstrips the current supply from sellers. Looking ahead to the fall market, this trend of strong net migration into Alberta and the greater Edmonton area is expected to persist, further exacerbating the limited housing supply. This imbalance is highly likely to drive prices higher as eager buyers compete for available inventory. Single-family properties in the accessible $400,000 to $600,000 range are predicted to remain exceptionally popular, drawing strong interest from buyers seeking desirable yet affordable homes.

Another segment poised for significant activity is duplexes without condo fees. These properties are expected to be quickly absorbed by buyers who may be priced out of the detached housing market but are still seeking a more affordable homeownership option. As prices continue to rise for high-demand property types, a natural shift is anticipated, with buyers moving down-market, which will bring increased vitality to Edmonton’s condominium sector. Out-of-province investors, attracted by Alberta’s landlord-friendly policies, are also projected to play a crucial role in the resale condo market.

In summary, Edmonton’s fall market is robustly positioned for continued growth, characterized by increasing prices and heightened buyer activity. The potent combination of affordability, expanding employment opportunities, and a recovering condo market solidifies Edmonton’s appeal as a top destination for both real estate investors and homebuyers alike. The coming months are expected to reveal a vibrant and dynamic real estate landscape, further cementing Edmonton’s reputation as a key player in the Canadian housing market.

Calgary, Alberta: Sustained Demand and Record Prices

Christian Twomey, Re/Max Landan Real Estate

Calgary’s housing market has been on a remarkable trajectory, primarily propelled by a consistent influx of migrants into the province, with Calgary being a significant beneficiary. This robust trend, evident since last year, continues to fuel strong demand for housing across Calgary and its surrounding areas. The city witnessed record-breaking sales activity last year, a momentum that has not waned and consistently outperforms long-term market trends. Calgary has been operating under sellers’ market conditions for an extended period, and a return to a more balanced market would necessitate a more diverse range of housing options and a substantial increase in supply across all property types, including purpose-built rental accommodations.

While the current interest rate environment has undoubtedly influenced real estate transactions, the Calgary market continues to experience robust demand across all segments despite fluctuations. A critical principle in real estate analysis is its inherently local nature. Understanding regional and community-specific conditions is paramount. Although Calgary and its surrounding areas maintain relative affordability compared to other major Canadian urban centers, market conditions here can vary significantly even from those just a few hours north in Edmonton.

Based on insights from the Calgary Real Estate Board’s Q2 2023 Housing Market Report, the Calgary housing market in Fall 2023 is expected to remain highly dynamic, presenting both notable trends and challenges. Sales activity, while moderated from the record-breaking pace of the previous year, continues to significantly outperform long-term averages. Interestingly, there’s been robust demand observed in the higher price segments of the market. This trend is likely driven by an influx of inter-provincial migrants, particularly from Ontario and British Columbia, who find Calgary’s relative affordability highly appealing despite higher lending rates. The city’s strong labor market further contributes to sustained demand across all property types.

This escalating demand is continually confronted by a persistent shortage of housing supply, which is driving property values upward in both the resale and new home markets. Typically, as the colder months arrive, sales activity tends to slow. However, the current housing inventory shortage is projected to maintain tight market conditions, leading to further price appreciation across all property types throughout the second half of the year. Ultimately, Christian Twomey predicts that this ongoing supply shortage will result in continued record-high prices in the Calgary housing market during Fall 2023, solidifying its position as one of Canada’s most competitive markets.

Vancouver, British Columbia: Investor Squeeze and Long-Term Stability

Keith Roy, Team Leader, Keith Roy and Associates

For Vancouver’s fall market, a significant driving factor will be the lingering “hangover effect” of the increased interest rates implemented throughout 2022 and 2023. This financial pressure is particularly impacting rental investors. Many are now making the difficult decision to sell their properties as interest rates have risen substantially, triggering mortgage rate adjustments, and provincial rent increase limits (2.0% in 2022 and 3.5% in 2023) have constrained their profitability. This “perfect storm” has squeezed many investors, making them unwilling to continue subsidizing tenants, even with the long-term prospect of capital appreciation.

Despite the series of interest rate hikes, average prices in Vancouver are holding steady at or near the peak levels seen in March 2022. This indicates a market that is neither in a state of panic nor a frenzied boom. Instead, buyers and sellers are primarily motivated by traditional life events such as new jobs, marriage, divorce, or family expansion. Many individuals who postponed their moving plans in late 2022 or early 2023 due to a slower market are now re-engaging, creating renewed activity.

In the short term, the outlook for Vancouver real estate is characterized as stable and less volatile, anticipating a much improved fall market compared to the more subdued conditions of 2022. The long-term perspective for Vancouver remains consistently positive. This optimism is underpinned by the region’s severely limited land supply, its desirable mild climate, the high quality of life it offers, and a continuous stream of increasing national and foreign demand for housing. These enduring factors collectively ensure Vancouver’s housing market retains its robust appeal over time.

Victoria, British Columbia: Inventory Returns, but Sellers Retain Control

Tony Joe, Broker/Owner, Re/Max Island Properties

In Victoria, a welcome development is the return of inventory to the market, marking 16 consecutive months of year-over-year growth. However, despite this increase, the market is far from transitioning into a buyer’s domain. Inventory levels remain significantly below the ten-year average, a situation exacerbated by sustained demand as Canadians continue to migrate to the picturesque Vancouver Island region.

While rising interest rates have undeniably impacted some buyers, the Victoria market’s foundation is not predominantly built upon first-time homebuyers. Instead, it is heavily influenced by those who already possess substantial equity, either from the appreciation of their existing Victoria homes or from “downsizing” from more expensive areas like Toronto and Vancouver. This demographic often has greater financial flexibility to navigate higher borrowing costs.

The availability of “good inventory” remains elusive. Although new listings regularly enter the market, a considerable number of unsold properties persist. Concurrently, highly desirable properties continue to attract multiple offers, often selling above the list price and, on occasion, even unconditionally. This duality highlights the persistent demand for quality homes amidst broader market inventory challenges.

July proved to be a record-breaking month for many real estate professionals in terms of production. Activity saw a natural seasonal dip in August, as favorable weather encouraged consumers and licensees alike to take holidays and enjoy the summer. However, the start of September indicates a return to a healthy pace, with strong sales levels anticipated to continue through the remainder of the year. While the total number of transactions for 2023 is expected to fall below 2022 figures, this is largely attributed to the exceptionally strong transaction numbers recorded in the first four months of 2022, which have not been matched this year.

Tony Joe predicts that until inventory levels increase by at least 50%, sellers will continue to hold the upper hand, with prices remaining stable despite higher borrowing costs. Despite various government interventions aimed at controlling market demand, the Victoria market continues to thrive, largely fueled by the ongoing migration of Canadians seeking the West Coast lifestyle. Anecdotally, Joe frequently encounters clients relocating from other provinces, often citing the desire to escape harsh winters. This sentiment (“I can’t take another snowy winter”) underscores a powerful, consistent driver of demand for Victoria real estate, ensuring its resilience in the face of broader economic shifts.

Key Trends Shaping Canada’s Real Estate Future

Across these diverse Canadian markets, several overarching trends emerge that are poised to shape the real estate landscape not just for Fall 2023, but well into the future. The impact of rising interest rates is undeniable, forcing both buyers and sellers to recalibrate expectations and strategies. While higher borrowing costs reduce purchasing power for some, they also contribute to a market rebalancing, fostering more realistic pricing and negotiation opportunities.

Inter-provincial migration stands out as a powerful determinant of regional market strength. Provinces like Alberta and British Columbia, in particular, are witnessing significant influxes of residents from more expensive urban centers, drawn by relative affordability and economic opportunities. This migration dynamic directly impacts inventory levels, driving demand in specific price ranges and property types, and often exacerbating existing supply shortages.

Inventory, or the lack thereof, remains a critical challenge in many markets. Low supply fuels competition, leading to sustained price appreciation and competitive bidding, even in the face of higher rates. This shortage is not uniform, however, with some markets seeing an increase in total listings while still struggling with a scarcity of “good” or desirable properties. The recovery of condominium markets in cities like Winnipeg and Edmonton also indicates a shift as buyers seek more accessible entry points into homeownership.

Ultimately, Canada’s real estate market remains a mosaic of highly localized conditions. While national trends provide a broad strokes picture, the granular insights from local experts reveal the unique pressures and opportunities present in each city. Adapting to these local nuances and seeking expert guidance will be crucial for anyone looking to navigate the Canadian housing market successfully in the coming seasons.

We invite you to share your predictions and observations for the upcoming season in the comments below. What trends are you seeing in your local market?