Housing prices to rise modestly

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Buyers beginning to come off the sidelines’

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Average house prices are expected to rise between one and six per cent this fall in most regions – though there are several notable outliers – according to Re/Max’s 2024 Fall Housing Market Outlook.

Prices are expected to be flat or decline in Toronto, Hamilton, Burlington, Kitchener-Waterloo, North Bay and London, according to the report, which was released on September 3 – the day before the Bank of Canada (BoC) lowered the key interest rate to 4.25 per cent in the third cut of the year.

According to a Leger survey commissioned by Re/Max as part of the report, 16 per cent of Canadians admitted they will feel more comfortable engaging in the real estate market once they see more than a 100-basis-point cut to the BoC’s lending rate between now and the end of the year

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“The fall market is usually a good early indicator for activity as we look ahead to early 2025 and we’re headed toward more healthy territory,” says Re/Max Canada President Christopher Alexander. “With interest rates starting to ease, buyers are beginning to come off the sidelines.”

That’s not to say, however, the fall market will be in “full swing” according to historic standards, he notes. “Consumers will drive that trend, so we’ll need to see a bigger move by the BoC for that to happen.”

RATES REMAIN A ‘BARRIER’

Right at Home Realty President John Lusink agrees. “High mortgage rates will continue to be a barrier to entry for buyers this fall. However, we’re also closely watching the broader economic environment, as uncertainties around job security and financial stability are influencing whether buyers feel confident enough to take the plunge,” he says.

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“Inventory is high and I anticipate a gradual increase this fall, particularly in October and November as families settle into post-summer routines. However, there’s still a disconnect between buyer demand and what’s available,” says Lusink.

“Single-family, low-rise and homes that support multigenerational living – all within $800,000 to $1 million range – are highly sought after but can be hard to come by. We’ll need to see all these conditions line up to see more activity in the market.”

Greater Toronto Area realtors reported 4,975 home sales through the MLS® System in August – down by 5.3 per cent compared to 5,251 sales reported in August 2023, according to the Toronto Regional Real Estate Board (TRREB).

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New listings, meanwhile, hit 12,547 – up by 1.5 per cent year-over-year and the average selling price was down by 0.8 per cent compared to August 2023 to $1,074,425.

“The BoC’s rate cut announced on September 4 will lead to a further improvement in affordability, especially for those using variable rate mortgages,” TRREB President Jennifer Pearce says.

“First-time buyers are especially sensitive to changes in borrowing costs. As mortgage rates continue to trend lower this year and next, we should experience an uptick in first-time buying activity, including in the condo market.”

TOO LITTLE, TOO LATE?

The Re/Max report found 25 per cent of Canadians are actively saving for a home purchase and are confident they will be able to buy soon, with the majority being those aged 18 to 24 years at 35 per cent.

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But dropping interest rates may prove too little, too late for some current homeowners: 14 per cent say they need to renew their mortgage soon and with the current higher interest rate, they may need to sell their home.

Twenty-eight per cent of Canadians say they’re thinking about moving to another country and 25 per cent say they are reconsidering whether to have children or start a family due to housing affordability challenges.

“Despite some consumer confidence starting to return to the market this season, the reality is Canadians are still grappling with some serious housing affordability challenges rooted in lack of supply,” Alexander says. “Yes, borrowing is becoming less expensive, but this won’t make housing affordable in the long run.”

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He’s among those calling for a national housing strategy. “Markets ebb and flow, and as buyers re-enter the market and absorb inventory, we’ll see more upward pressure on price,” he says.

“Ultimately, for the long-term health of Canada’s housing market, we need a national housing strategy developed in collaboration between all levels of government that’s more strategic and visionary in how we can use existing lands and real estate to boost supply.”

SIDEBAR:

Across Ontario

Low housing supply continues to impact multiple markets across Ontario, keeping prices high. However, some buyers are gaining more confidence as mortgage rates decrease and are slowly re-entering the market heading into fall, keeping prices relatively stable in comparison to the year prior.

Also, according to Re/Max’s 2024 Fall Housing Market Outlook, increasing markets include:

• Timmins, Sudbury, Brampton, Mississauga and Barrie, each rising five per cent
• Peterborough, York Region and Kingston, each up three per cent
• Niagara, up two per cent
• Durham Region and Ottawa, each up one per cent
• London, up 0.1 per cent

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