City’s housing market forecast for 2023 is ‘one of balance’

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This article was published 14/12/2022 (1021 days ago), so information in it may no longer be current.

Don’t expect a sudden drop in Winnipeg home prices next year.

House prices might decrease one per cent, on average, in a year’s time, according to Royal LePage’s latest Market Survey Forecast.

“We see… this (upcoming) year as one of balance, where the supply is going to serve the demand in a healthy way,” said Michael Froese, a managing broker with Royal LePage.

The average detached home price in Winnipeg could rise one per cent — to $410,565 — while a typical condo might decrease three per cent, to an average $243,082, by next December.

“Real estate is (now)… transacted in a much more reasonable manner,” Froese said. “(It’s) opposed to the last two years (where Manitobans) just went to see a house, took a lap through it and tried to buy it.”

He called 2022 a “tale of two markets.”

“The first half of the year was fast and ferocious. Prices escalated,” Froese said.

The price for a detached home in Winnipeg hit a peak — $454,832 — in May. A number of reasons, including demand and inflation, contributed.

“Conversely, the last six months, it’s been coming down almost as quickly,” Froese said.

Since March, the Bank of Canada has increased its key interest rate by four per cent to slow inflation.

A combination of high inflation and the increased rates, which affect mortgages, have cooled buyers’ demand for houses, Froese said.

“If we had an enormous abundance of supply, then we’d say, ‘Hey, prices might actually come down,’ but… we don’t have the supply,” he said. “There’s a nation-wide housing shortage.”

And there’s still demand, Froese noted — Winnipeg has boosted immigration since its pandemic-era slowdown, and Manitoba’s unemployment rate reached historic lows this year.

In November, it was 4.4 per cent.

“Housing is an essential need… there’s still buyers out there looking for property,” said Akash Bedi, a real estate agent and president of the Winnipeg Regional Real Estate Board.

Lately, there’s been “good demand” for homes in the $250,000 to $450,000 price range, Bedi said. Interest has waned on houses placed in the half million to $1 million category, he added.

Froese expects Winnipeg’s housing market to follow pre-pandemic patterns next year — a slow beginning in winter, with an uptick in spring as people get used to established rates and prices.

“(That’s) if those hikes are done,” Froese said, referring to the Bank of Canada’s interest rate increases.

Condo prices likely won’t rise in Winnipeg because the city is “a residential detached home city,” Froese said.

Condos aren’t most buyers’ first choice, and there are more slated to become available next year, he said.

A recent forecast by Altus Group predicts Manitoba will see 7,225 housing starts next year. The province will have an increase in apartment starts and a decrease in single family home starts when compared to this year, the report states.

“The forecast for 2023 would indicate to us that the demand in Manitoba will continue to be very strong,” said Lanny McInnes, president of the Manitoba Home Builders’ Association.

A housing start is marked each time construction workers begin a new residential build. Manitoba’s 10-year average is 6,697 starts.

The province hit a record — 8,023 housing starts — in 2021; it’s been slowly decreasing since. This year is expected to have produced 7,335 starts, according to Altus Group’s forecast.

“While it’s down from record levels… it’s relatively strong compared to other parts of the country,” McInnes said.

Every province listed in Altus Group’s forecast, released Dec. 9, is expected to have a significant drop in housing starts next year, except for Manitoba.

“Manitoba continues to be one of the most affordable places to build a new home,” McInnes said.

The average Winnipeg home might cost $368,181 by the end of 2023, according to Royal LePage’s latest outlook, released Tuesday. Nationally, the average price is predicted to be $765,171.

Still, supply chain knots, inflation and labour shortages have increased the cost of home builds in the keystone province, McInnes said.

The price of asphalt rose around 30 per cent year-over-year this fall, according to Altus Group’s report. Concrete prices surged between 10 and 20 per cent during the same period.

gabrielle.piche@winnipegfreepress.com