The housing market in Canada is expected to see some changes this fall, with interest rates decreasing and the potential for first-time homebuyers to enter previously unaffordable markets. Despite the Bank of Canada’s rate cuts this year, activity in the housing market has been slow as buyers struggle to qualify for mortgages. The current interest rate cuts are expected to make it easier for first-time buyers to enter the market, but some buyers may hold off in hopes of further rate cuts.
Experts predict a healthy increase in housing sales in the fourth quarter of 2024, but note that activity is still below pre-pandemic levels due to elevated borrowing costs and home values. It is anticipated that the Bank of Canada will lower its policy rate to around 2.5% in 2025. The recent rate cuts are expected to encourage more buyers to re-enter the market, potentially leading to increased competition for properties.
As interest rates decline and market conditions soften, home prices could see an increase. Re/Max Canada forecasts a modest rise in home prices in most Canadian cities through the end of the year, with some markets projected to experience price drops, particularly in Ontario. While lower interest rates may drive up prices in the long run, the short-term trend will depend on the balance of supply and demand in the market.
Housing affordability is expected to improve into the fall but remain strained in most markets. Despite multiple rate cuts, interest rates are still relatively high, and home prices have not decreased significantly. The condo market in Toronto, which is currently oversupplied, could see a price correction, offering an opportunity for first-time buyers to enter the market. Experts predict further price drops in Toronto’s condo market as new completions hit the market and declining rents push investors to list their properties.
There is both potential for prices to continue to fall in the condo market due to oversupply and for buyers to rush in to snap up listings in response to lower interest rates. Condos are often the starting point for new buyers due to their lower price point. Experts believe there is a significant opportunity for first-time buyers in the condo markets of Vancouver and Toronto, as both borrowing costs and prices could potentially decrease. However, it is also noted that there are opportunities in other cities across Canada for buyers to find affordable properties.
Overall, the Canadian housing market is expected to see some changes this fall as interest rates decline and buyers re-enter the market. While some markets may experience price drops, others could see modest price increases. The outlook for affordability is mixed, with improvements expected, but affordability still strained in many markets. This fall could present opportunities for first-time buyers to enter the market, particularly in oversupplied condo markets such as Toronto.
