The realtor had predicted that home prices across Canada would increase by 15 per cent during 2022, resulting in a 16.5 per cent increase in the GTA.
But now she says she expects prices in the GTA to rise only about 3 per cent by the fourth quarter of 2022. Her Canada-wide forecast calls for the median home price to rise by about five per cent by the fourth quarter of 2022.
The forecast comes after the Canada Mortgage and Housing Corporation downgraded its forecast for the country’s real estate prices as well.  It now says it expects average prices to fall by as much as five percent between the first quarter of this year and the second quarter of 2023 if interest rates continue to rise.
“We have significantly reduced our outlook for 2022, but home prices are still projected to end the year higher than in 2021 and well above pre-pandemic patterns,” said Royal LePage Chairman and CEO Phil Soper in a press release.  “Following record price gains across the country, many markets in southern Ontario and parts of Greater Vancouver – especially those that saw the highest price appreciation in the past two years – experienced declines in the second quarter.  I expect this highly unusual downward movement in home values ​​to be short-lived as the nation’s chronic homelessness has not been resolved.”
As recently as April, Royal LePage predicted that the median price of a home in the GTA would exceed $1.3 million by the end of 2022, yet it now forecasts a median price of $1,153,394 by the end of the year.  That’s roughly in line with the $1,119,800 the average GTA home was changing hands for at the end of 2021.
The more pessimistic forecast comes after GTA home prices fell for a fourth straight month in June and sales fell 41%.
The Bank of Canada is also widely expected to raise its key overnight rate by 0.75 per cent today, which could further increase borrowing costs.
In the release, Soper said Royal LePage believes the second quarter of 2022 will end up having “produced most of the price declines we’ll see this cycle” with prices more or less holding steady for the rest of the year.
He also said the current recession will “create limited demand,” which could ultimately push prices higher once economic conditions change.
“We don’t expect to see much movement in home values ​​for the rest of the year,” he said.  “Canada is experiencing strong growth in household formation, so positive economic news, such as a signal that interest rates have reached a manageable level of inflation, should spark a return to property value growth.  The small percentage of consumers who bought property in the February/March 2022 peak will have seen a short-term fall in the value of their homes, but there is no doubt that they will soon make up that lost ground.”
According to Royal Lepage, the second quarter of this year marked the decline in home prices compared to the first quarter since the start of 2019, with resale values ​​falling by an average of 4.9 per cent across Canada .
The decline was sharper in the Greater Toronto Area, where average prices fell by about 8.1%.
However, the slowdown has not been felt as well in the city’s housing market.
Royal LePage says median home prices fell only 3.3% in the second quarter, compared to a 9.5% drop in single-family home prices.