TORONTO - After months of scouring online listings and visiting half a dozen open houses, Mike Lock and his wife became discouraged, convinced that they were never going to be able to buy a home in their price range.
With a budget of around $400,000, the couple was severely limited in their options in Toronto where the average house price in November was nudging $540,000 - up 11 per cent year-over-year.
But last week, their offer of $385,000 for a house in east Toronto was accepted. It was outside of their preferred neighbourhood, and only had two bedrooms but the couple counted themselves lucky.
"It was very competitive," said 27-year-old Lock, who works for an architectural firm.
After years of a hot streak, the real estate market in Canada appears set to cool to a simmer in 2014 with demand expected to remain relatively strong across most provinces.
Scotiabank chief economist Warren Jestin forecasts housing prices will stay flat or rise slightly, but "shrill" predictions of a drastic bottoming out in prices will likely not ring true in the New Year.
"I wouldn't kid myself into thinking that the (upwards) trends we've seen over the past five years will continue. I don't think that's going to happen at all," said Jestin.
"Credit growth has slowed down, home ownership levels are at record levels and employment growth is moderating. Everything is telling me that this market is going to level out, go sideways. Maybe go through a bit of an adjustment and that process is going to take two or three years, minimum."
Lock said he and his wife had put in an offer on one other home but lost to a buyer who bid $56,000 over the asking price. Other houses within their budget were either complete gut jobs, or listed artificially low in hopes of sparking a bidding war.
Despite the obstacles, he said they remained determined to buy a house.
"Back in 2010, I thought things would go down because prices were so high. But it just continued shooting up since then," he said. "I've learned the lesson that you can't time the market; you buy when you can and you hold for a long time."
The Canadian Real Estate Association has projected that 458,200 previously owned homes will be sold through its members this year — eight-tenths of a per cent more than in 2012 and up from the September forecast of 449,900.
It also expects the increase to continue into 2014, as the association forecasts resales will come in at 475,000 homes nationally, up from the previous 2014 forecast of 465,600.
The national average price for a home is also expected to creep higher to $391,000 next year, from $382,000 in 2013.
CREA chief economist Gregory Klump said Canadian home prices will continue to stay close to current levels in most markets due to continued signs of a strong economy, increases in salaries, and a demand for single-family homes.
Lori-Ann Beausoleil, national leader for real estate for PricewaterhouseCoopers LLP, said the market continues to show strength compared to foreign markets.
"We're not looking for major record highs in 2014, but we're also not going to see for record lows," said Beausoleil, who is also a partner at the consulting firm.
"We're in a very balanced market right now where we have access to capital, equity, debt, opportunity to deploy that capital."
But she noted that regional differences make it inaccurate to paint the housing market with the same brush.
Interprovincial migration has helped keeps demand for housing high in oil-rich Alberta where employment rates are strong, while B.C. is seeing some sort of a flattening after years of exorbitantly high prices, particularly in the Vancouver area. This compares to Victoria where home prices have been declining for the past few years.
It's also difficult to compare the market for single-family homes to the market for condominiums, Beausoleil said.
One of the major concerns going into 2014 will be whether there are enough buyers for condominiums in cities such as Toronto, Vancouver and Montreal, as construction on more units are completed.
Yet, even with an oversupply, Beausoleil said there will continue to be people who are determined to buy.
"The pipeline won't be robust as it has been historically but I think that condos, whether you're a senior that is retiring or the younger generation who want to live, work and play in the area they live in, will continue to support the market which has offered such growth in our real estate market," she said.
"We are not seeing a lot of pressure because you have a variety of buyers: foreign investors, Canadians migrating to urban centres, professionals and individuals who are buying them for the future as an investment."