Buyers and sellers move off the sidelines in 2023

Rising interest rates and higher borrowing costs in 2022 resulted in sidelined homebuyers and sellers. Could some reprieve be in sight this year? After home sales and average selling prices flatlined last year, recent Ipsos polling reveals that buyers and sellers are eager to return to the market.

I chatted with Sean Simpson, Ipsos senior vice-president, on a recent episode of TRREB’s Ready to Real Estate podcast. We discussed how the latest consumer polling could impact market trends for the remainder of 2023.
Findings indicate that the promise of shrinking interest rates will entice buyers back into the marketplace. The belief is that interest rates have peaked and will logically begin to fall. Four in 10 prospective buyers say that they’ll consider variable rate mortgages. Remarkably, this is the highest number that Ipsos has ever measured since it started polling for TRREB in 2015.

More attractive market

The combination of lower housing prices and the promise of decreasing interest rates will create a more attractive market for first-time buyers. In last year’s poll, the percentage of first-time buyers as a share of likely homebuyers increased from 39 to 46 per cent. Many potential first-time buyers will be weighing renting versus buying in 2023. With the diminished rental supply and high competition between renters, Sean shared that one-third of renters polled by Ipsos said they will not tolerate any further rent increases before looking to purchase a home.

Supply and demand should be harmonious, as the number of homeowners considering listing their homes this year is also on the rise. However, Sean cautioned that while rising home prices prompt more listings, any increase in supply has historically started at a very low level. You can expect market conditions to remain tight even if we see a moderate improvement in supply.

More competition

Increased listing activity will emerge from sellers interested in upgrading. This will affect the types of homes coming to market. Ipsos is projecting that nearly one in four listings will be townhouses, up significantly from earlier years. There will also be more competition for these homes in the second half of the year. This is because first-time buyers in the 416 area code will favour townhouses or condos for their relatively more affordable price point compared to detached or semi-detached houses.

Ipsos’ findings reflect that homeowners with single-detached homes plan to stay put in 2023. The number of listings will drop while buyer interest is forecasted to remain strong. With limited supply, Simpson believes that competition for these coveted homes will undoubtedly increase in the second half of the year, putting upward pressure on price.

If you’d like to listen to my entire conversation with Simpson and other insightful chats with industry experts, head over to TRREB’s Ready to Real Estate podcast. We strive to cover topics that keep our listeners up to date on all things real estate in the GTA.

You can also stay up to date with our monthly Market Watch. We break down prices, sales and new listings each month with an easy to glance report. Visit trreb.ca to explore the latest look into the housing market. Plus, connect with a TRREB member realtor and search listings in real time on any device.