In 2022, the real estate market continued to have hiking home prices with a decrease in home sales, especially towards the end of the year as interest increased. According to The Canadian Real Estate Association, starting in November 2022, there was a 3.3% month-over-month decline in national home sales. Compared to 2022’s peak in February with an average of $816,720, the national average home price in November 2022 was $632,802 which is a 22.5% decrease. The amount of newly listed properties have also declined by an average of 1.3% month-over-month in November, with larger declines in the B.C. Lower Mainland and Okanagan regions. November 2022 marked the lowest number of new listings in a month in 17 years.

With the current inflation rates in Canada, it has forced interest rates to increase as well. The Bank of Canada kept raising rates aggressively in 2022, with a 100-basis point hike in July. This month’s hike marks the 8th time the Bank raised rates since March 2022. As of Jan 25, 2023, the overnight rate stands at 4.5%.

Will home prices drop in 2023 and bottom out?

While Canadians will still likely continue to struggle with inflation in 2023, RE/MAX anticipates that 60% of housing markets will see more balanced conditions, meaning the supply and demand for housing will be more even compared to 2022. This is expected to be more apparent during the third and fourth quarters of 2023, especially in the Greater Toronto Area (GTA), Mississauga, Greater Vancouver Area (GVA), Calgary, Regina, and Winnipeg. The largest price declines are forecasted to be in Ontario and Western Canada where several cities can see a 10-15% decline. However, Atlantic regions such as Halifax and St. John’s are expected to see an 8% and 4% increase in home prices respectively.  TD bank predicts that Canadian home sales will bottom in early 2023.

Despite the 2023 housing market predictions, Vancouver is still anticipated to be the most expensive region, averaging a home price of $1.2 million. On the other hand, Regina will have the most affordable prices with an average of $361,495 by the end of 2023. Royal Lepage notes home prices have declined from the highs earlier last year, but are still higher than pre-pandemic. The projected average home price in Canada for Q4 2023 is estimated to be 15% higher than Q4 2020 and 18.4% higher than Q4 2019.

Although house prices will fall, rents are projected to rise as there was a lack of rental listings. In 2022, the average price of a single bedroom apartment in Toronto is now $2481 a month which has increased 20% year-over-year. The hike in rental prices is mainly because listings have gone down 25.6%, causing there to be a lack of supply. However, due to such high prices, most Canadians cannot afford to buy a house and hence, there are more renters than homeowners. This is prominent in cities such as Montreal, Quebec City, and Halifax as more than 50% of the buildings built since 2016 are rented. From a survey conducted by RE/MAX, 15% of Canadians are debating about moving to a different province for better housing availability and livability.

Will there be New Regulations in 2023?

The Government of Canada can see how inflation has caused houses to be less affordable for Canadians so they have taken new measures to counteract the problem.

To make homes more affordable to Canadians, the Government of Canada has passed the Prohibition on the Purchase of Residential Property by Non-Canadians Act which came into effect on January 1, 2023. This Act prevents non-Canadians or corporations that are not incorporated in Canada, from buying residential property for 2 years beginning on January 1, 2023. According to the Government of Canada, residential property is defined as a building with 3 homes or less and parts of buildings such as a semi-detached house or a condominium unit. If this law is violated, the non-Canadian or anyone who intentionally assists a non-Canadian, will receive a $10,000 fine and the court may request the sale of the house. This new regulation can help make sure that homes are being used by Canadians to live in and not as assets for foreign investors.

For foreigners who already own a house in Canada, they will need to pay a 1% vacant home tax annually if the home is underused. This measure is to ensure that non-Canadians pay their fair share of Canadian tax and in hopes that this will free up more homes for Canadians.

The last measure is to add Goods and Services Tax/Harmonized Sales Tax (GST/HST) on all houses that are resold before it has been built or lived in. This was effective as of May 7, 2022 and can help reduce homes being sold for high prices.

All three regulations are made for the same purpose – to make homes more affordable and increase the number of Canadian homeowners.

Housing Market 2023 Predictions

As 2022 was still a year of hiking home prices, the Government of Canada is taking measures to help Canadians become homeowners at more affordable prices. Although interest rates are expected to remain the same, house prices are forecasted to decrease in many regions. Based on the trends, 2023 is predicted to be a year with a more balanced market.

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The metaverse isn’t just another Bitcoin. It’s not even a recent concept! The metaverse simply describes integrated 3D virtual worlds — imagine games like Roblox or World of Warcraft. These games have been around for decades!

But as technology advances, companies are finding new ways to put the metaverse to use. McKinsey believes that the metaverse could drive physical product sales, reduce the need for physical stores, and enhance in-store experiences. The consulting firm further found that 64% of consumers surveyed were excited about shopping in the metaverse.

This article discusses the metaverse and how it may affect the real estate industry.

What is the metaverse?

The metaverse is any online 3D world where you can interact with others via an avatar. We’re used to metaverses through video games. But companies now want to apply the technology to industries beyond gaming.

For example, instead of using a video conference to meet with someone halfway across the world, you could meet in a metaverse and engage in new ways. Integrate this experience with virtual and/or augmented reality and create a much more immersive experience than just a ZOOM call.

You could also create better digital shopping experiences. Instead of flipping from webpage to webpage, consumers may someday visit virtual malls from the comfort of their homes. Here, people could purchase real-world items in a more mesmerizing shopping experience, and this better user experience could translate to more sales.

The possibilities for the metaverse are endless. And the industry is only beginning. That’s why everyone has high hopes.

Many people are already investing in the metaverse by purchasing land in specific digital universes, hoping that the value of these digital properties will appreciate.

How does buying metaverse land work?

Some metaverses let you purchase unique digital land and other properties. Big names like Snoop Dogg and Steve Aoki already own properties in a metaverse called Sandbox. Decentraland is another popular network where people can purchase unique parcels of land.

Metaverses usually have their own cryptocurrency used as a medium of exchange. Decentraland’s currency is called MANA, for example. To purchase real estate on Decentraland, you ultimately need MANA.

After obtaining the necessary currency, the land purchase process depends on the specific metaverse. Each has its own procedures.

Many assign you an ownership ID to the digital land parcel, similar to an actual deed. Buyers may need to show proof of their real-life ID and address too. Your virtual deed could also come as an NFT.

Like the real world, these properties can be anything from houses to apartments to commercial storefronts. It can also be a plot that you develop into a customized residential or commercial space.

Unlike reality, land in metaverses is infinite. There’s also usually no travel time between two points in a metaverse. In the real world, land scarcity and a property’s location determine a building or land parcel’s value and cause it to appreciate.

A particular area of a metaverse might appreciate for other reasons, however. If you own the digital parcel beside Snoop Dogg, you could expect that that land could fetch a nice premium. High-traffic areas are generally the ones that sell for big dollars.

For example, one parcel of Decentraland land sold for $2.4 million worth of MANA in late 2021. This piece of land was located in the “Fashion Street” area of Decetraland, making it highly valuable. The purchaser, tokens.com, hopes to one day build a virtual shopping centre to sell virtual clothing for digital avatars.

In addition to infinite land, there’s also the potential for infinite metaverses. If Google, Meta, and other large tech companies all started a consumer-targeted metaverse, this could reduce the popularity of Decentraland or Sandbox and then reduce the value of all land there as investors rush to invest in a new metaverse.

Just think of the rise and fall of other websites and networks! You don’t know if your metaverse will be the next MySpace or Tumblr.

How Could the Metaverse Affect Tangible Real Estate?

While the potential for a new way to “invest” in real estate might become viable someday, how can the metaverse affect the real estate we know? One way is through more immersive showings and the ability to meet online in the metaverse.

Realtors currently use many ways to display a property. Photos are the most common. But videos, 3D renderings, and 360-degree cameras are increasing in popularity too.

But imagine a metaverse where potential buyers can walk through online replicas of houses on the market. Suddenly, buyers in foreign locations can view a listing as if they’re there. This could help increase the draw and attraction of a house and encourage more buyers.

Simultaneously, a realtor can take buyers through the property and interact with them in the metaverse as if it was a real-world showing.

The metaverse could also change home buying by giving buyers, sellers, and brokers a place to meet. As a buyer or seller, you may someday have an initial consultation with a realtor in the metaverse when an in-person meeting isn’t viable. Or, suppose you meet your mortgage broker in the metaverse. The ability to show and view facial expressions and body language could help you explain your needs and allow realtors or brokers to reveal how they can help.

The metaverse is not a new technology. But many companies are now trying to apply it to new industries. Buying and selling real estate in the metaverse has significant actual dollar values, though it comes with numerous risks.

For real-world homebuyers and sellers, the metaverse has numerous applications in how we’ll someday view a home or meet with the people who help us in the home purchase or sale process.

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