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TD Bank has revised its forecast, anticipating a steeper decline of 10 per cent in home prices across Canada's real estate markets compared to the initially projected five per cent drop. This adjustment is attributed to an upgraded bond-yield forecast and a substantial increase in housing supply, particularly in British Columbia and Ontario. The plummeting sales-to-new listings ratio in Ontario, which dropped from 63 per cent in May to 39 per cent in October, highlights the sudden surge in supply contributing to market deterioration.
However, despite the projected decline, TD Bank emphasizes that even with a 10 per cent drop in average home prices, they would still be 15 per cent higher than pre-pandemic levels. The expectation of a potential interest rate cut by the Bank of Canada towards the end of the second quarter of the following year is forecasted to prevent a more severe downturn.
The Canadian Real Estate Association (CREA) also noted a significant decline in housing sales, down by 5.6 per cent in October, with a slight increase in the national average sale price for homes. CREA's senior economist, Shaun Cathcart, anticipates suppressed housing pressure until at least spring 2024, with the outcome dependent on the Bank of Canada's actions regarding interest rates.
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