WATERLOO AREA — With interest rates rising and more homes coming on the market to boost supply, Royal LePage expects home prices to rise much more slowly over the remainder of 2022.
The company released its revised market outlook on Wednesday with a forecast that the overall price of a home in Canada will rise 5% in the fourth quarter to $817,950, compared to results at the end of 2021.
If this prediction holds, it means the national aggregate price will rise by less than $3,000 by the end of the year.
“We don’t expect to see much movement in home values over the remainder of the year,” Royal LePage chairman and chief executive Phil Soper said in a statement.
The overall price is calculated using a weighted average of the median prices of all property types, and includes resale and new homes.
The 5% forecast is a significant change from the 15% year-over-year increase forecast a few months ago, on the heels of an overheated first quarter in which home prices reached record levels in many markets.
“Some of the heat that had been driving the market cooled in the (second) quarter as rising interest rates coupled with economic uncertainty undermined consumer confidence and pushed buyers on the sidelines. “said Soper.
Most analysts expect the Bank of Canada to raise its key rate another 0.75% on Wednesday to 2.25%, after rising 0.5% in June.
The second quarter saw a considerable pullback in prices, with the national overall price down 4.9% from the first quarter, to $815,000. The national median price for a single-detached home fell 5.1% to $859,500.
This is the first time in more than three years that house prices have fallen quarter over quarter. The national overall price was still up 12.1% from the second quarter of last year.
“I expect this very unusual downward movement in home values to be short-lived as the country’s chronic housing shortage has not been resolved,” Soper said.
Closer to home, the overall price in Kitchener-Waterloo fell 10.5% from the first quarter to $820,000, while the median price for single-detached homes fell 14.4% to $928,200. $.
In Cambridge, the aggregate fell 9.8% quarter-over-quarter to $833,000, and the median single-detached home price fell 12.1% to $908,600.
“The selection of entry-level homes has greatly improved and there is less competition from GTA (Greater Toronto Area) buyers,” said Mike Milovick of Royal LePage Grand Valley Realty in Kitchener. .
“We are seeing buying opportunities that haven’t been there for months.”
Some buyers remained on the sidelines, Milovick said, waiting to determine the impact of interest rate hikes and inflation on the market.
“However, the area is struggling with a lack of housing supply that has not been addressed,” he said. “As buyers return to the market in greater numbers, it’s likely that this new inventory will be quickly absorbed.”
Royal LePage forecasts an overall year-over-year price increase of 3% in the fourth quarter for the GTA. A forecast specific to Waterloo Region has not been compiled.