Canadians Reconsider Real Estate Plans Amid Changing Market Conditions

Just a few months ago, Canadians were gearing up for a flurry of real estate activity with high hopes of buying, selling, or moving. However, the ever-changing landscape of the real estate market can bring surprises, and this is exactly what has happened. According to the Bank of Canada's (BoC) Survey of Consumer Expectations, households have significantly adjusted their housing plans in Q3 2023. Despite a booming population, fewer people are now planning to buy, sell, or move, suggesting a shift in the real estate landscape. Let's delve deeper into these recent developments.

Fewer Canadians Are Thinking of Buying A Home:

One notable change in Canadians' real estate plans is the decrease in the number of households considering buying a home. In Q3 2023, the share of households planning to buy a home within the next 12 months fell by 1 point, now standing at 12%. This decline is rather unusual, especially considering Canada's record population growth.

The likely reason behind this drop in homebuying plans is the sky-high real estate prices, which have made homeownership less accessible for many Canadians. While newcomers, or recent immigrants, show a higher interest in buying homes (29%), their median income might not align with this enthusiasm, highlighting the financial challenges many face in the housing market.

More Canadians Plan To Stay Where They Are:

In the same vein, fewer households are planning to move from their current residences within the next year. The share of those planning to move has fallen by 2 points to 19% in Q3 2023, though this percentage still represents a reasonably healthy share. Interestingly, newcomers are overrepresented in this group, with 44% of recent immigrants planning to move.

This is likely due to the fact that recent immigrants often face housing challenges and may need to relocate to find more suitable accommodations. However, it's important to note that while expectations play a role, they don't always align with reality, and external factors can impact these plans.

Fewer Canadians Are Considering Selling A Home, But Inventory Is Already Rising:

Another intriguing development is the decrease in the number of Canadians planning to sell their homes. In Q3 2023, the percentage of people planning to sell a home has decreased by 2 points to 11%. Surprisingly, newcomers with homes have a relatively high representation in this group, with 27% planning to sell.

The motivations behind this decision remain unclear. Are they regretting their initial purchase, or are they moving for other reasons? These questions are left unanswered, and the intricacies of the real estate market can often be enigmatic.

The Real Estate Market Landscape:

Consumer real estate expectations are showing signs of cooling, but it's important to note that these sentiments tend to lag behind actual market changes. Households' expectations often coincide with the market's current conditions rather than predicting future trends.

One of the most significant market shifts has been the increase in housing inventory and a decrease in buyers. This change has been so rapid that it has even taken Canada's largest banks by surprise. At least two major banks are now predicting even lower home prices in the future, and if the current trajectory continues, it's likely that other banks will follow suit.

Conclusion:

In Q3 2023, Canadians are reevaluating their real estate plans in response to changing market dynamics. Fewer households are considering buying or selling homes, while newcomers are disproportionately represented in both groups. The rapid shift in the real estate market has led to an increase in housing inventory, making it the most supplied market in over a decade.

As expectations in the real estate market adjust to new realities, it's becoming clear that Canadians are facing challenges in entering the housing market due to high prices and limited affordability. The next steps for the Canadian real estate market remain uncertain, and it will be interesting to see how these changing dynamics impact the housing landscape in the coming months.

With the single-family homes market under stress, multi-family rentals benefit as potential homeowners are forced to enter the rental market. Contact me at (604) 613-1693 or [email protected]?to learn more.

Bank failures, stock market losses and inflation are running at a 40-year high. Are you prepared for the coming Financial Crisis? Book a call with New World Precious Metals to learn how to protect your wealth in these uncertain times.

If you like what I post and want to receive my top stories of the week in your inbox, consider subscribing to Wealth Solutions for a Changing Economic Landscape Newsletter.

Follow me on LinkedIn.

#RealEstate #CanadaHousingMarket #MarketTrends #Homebuying #HousingInventory #Newcomers #Affordability #BankOfCanada #RealEstateExpectations

Credits: Canadian Real Estate Expectations Cool Despite Population Growth