Last year, the impact of rising interest rates and higher borrowing costs sidelined home buyers and sellers, with home sales and average selling price flatlining at the end of the year. Now, new Ipsos polling reveals these buyers and sellers are ready to return to the market.
Sean Simpson, Ipsos Senior Vice President, sat down with TRREB Chief Market Analyst Jason Mercer for a recent episode of the Ready to Real Estate podcast to unpack the latest consumer polling. Read on for a glimpse into their conversation about market trends in 2023.
Growing Demand, Shrinking Interest Rates
Buyers are ready to move back into the marketplace in 2023, in part, because they believe that interest rates have peaked and will start to fall. Where’s the evidence? Four in 10 likely buyers say they’ll consider variable rate mortgages — the highest number that Ipsos has ever measured since it started polling for TRREB in 2015.
First-Time Buyers
Lower housing prices combined with the promise of decreasing interest rates will create a more affordable market for first-time buyers in 2023. The number of first-time buyers as a share of likely homebuyers increased to 46 per cent from 39 per cent in last year’s poll.
Many potential first-time buyers will be weighing renting versus buying in 2023. Because of tight rental supply and strong competition between renters, one-third of renters polled by Ipsos said they will not tolerate any further rent increases before looking to purchase a home.
Listing Intentions on the Rise
More homeowners want to list their homes in 2023. Rising home prices generally prompt more listings, but any increase in supply will be starting at a very low level from a historic perspective. Expect market conditions to remain tight even if we see a moderate improvement in supply.
Increased listing activity will come from sellers looking to upgrade, affecting the types of homes coming to market — nearly one in four listings will be townhouses, up significantly from earlier years. There will also be increasing competition for these homes in the second half of the year, with first-time buyers in the 416 area code looking for townhouses or condos because of the relatively more affordable price point compared to detached or semi-detached houses.
The Coveted Single-Detached Home
Homeowners with single-detached homes are staying put in 2023. The number of listings will drop while buyer interest remains strong. With supply tight, competition for these coveted homes will increase in the second half of the year, putting upward pressure on price.
Catch Jason and Sean’s full conversation for more insights into the state of housing market in 2023 on this episode of Ready to Real Estate.