Barrie and Orillia will be among the cities outside the Greater Toronto Area (GTA) that will see a significant dip in home prices by the end of 2023, according to a new report released by financial services company Desjardins.
The firm said Ontario has posted the biggest decline in prices of any province since the market peaked nationally in February 2022 as borrowing costs have gone up over the past year.
"Given nearly half of existing home sales take place in the Greater Toronto Area, that market tends to garner the most attention," the reports says. "But during the pandemic, it was surrounding communities that grabbed the most headlines. Home prices rose significantly in the GTA, but not nearly as much as they did in smaller communities or nationally for that matter. And these places are expected to continue to see the biggest correction."
Barrie and Orillia are listed as communities where housing prices are expected to fall about 30-38 per cent by the end of the year, along with cities such as Kitchener, Niagara Falls, Durham, Guelph, Peterborough, Windsor, London, and other areas.
The steepest decline is projected to be in Bancroft where home prices are expected to plunge by 50 per cent by the end of the year, with a drop of between 39 and 41 per cent in Muskoka, Haliburton, Grey Bruce Owen Sound, Woodstock-Ingersoll and Northumberland Hills.
Desjardins says those communities including Parry Sound, Quinte, Renfrew and North Bay saw their average home price more than double from December 2019 to peak.
"These communities have also seen the largest price declines, and that trend is expected to hold going forward," the report said.
Prices are also projected to fall by the end of 2023 in the GTA, but the landing will be softer, with a decline of about 20 per cent, while places like Timmins, York Region, Ottawa and Thunder Bay will see drops of less than 25 per cent.
The report says while affordability in Ontario is expected to improve as home prices continue to fall and borrowing costs ultimately come down, it is not expected to return to pre-COVID levels by the end of 2024.
"This erosion of housing affordability has had further unintended consequences for the province of Ontario," according to the report. "Families have been leaving the least affordable parts of the province for greener pastures elsewhere in Ontario."
The report says residents have also been leaving Ontario altogether, with the Atlantic provinces being the preferred destination since the start of the pandemic, and Alberta more recently.
The numbers come out ahead of Wednesday's interest rate decision by the Bank of Canada.
Read the report here: https://www.desjardins.com/content/dam/pdf/en/personal/savings-investment/economic-studies/ontario-housing-market-march-6-2023.pdf
