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Housing Market Projected To Be Near-normal In 2024

Housing Market Projected to be Near-normal in 2024

After years of unprecedented irregularity, Canadians may see the real estate market return closer to normal in 2024.

According to Royal LePage’s newly released market forecast, Canadian home prices are predicted to see modest gains in the first two quarters of 2024, with more considerable increases expected in the second half of the year, following the projected start of interest rate cuts by the Bank of Canada. The average price of a home is set to increase 5.5% year-over-year to $843,684 in Q4 of 2024, with the median price of a single-family detached property and condominium anticipated to increase 6% and 5% to $879,164 and $616,140, respectively.

Home prices are forecasted to rise next year in all major markets across the country, with Calgary to see the greatest gains. Throughout the second half of 2023, while prices have been declining in other cities, the Calgary real estate market has bucked the trend continuing on an upward price trajectory.

In the Greater Toronto Area, the average home price is predicted to increase 6% year-over-year in Q4 of 2024, to $1,198,012. During the same period, the median price of a single-family detached property is anticipated to rise 7% to $1,481,950, while the median price of a condominium is projected to increase 5% to $754,845.

A lot of future activity will be dependent not only on reduced interest rates but the timing of mortgage renewals, too. Many would-be move-up buyers who have enjoyed ultra-low rates for the past few years will be willing to make a move as their current loan terms expire. No longer bound to their current property because of the interest rate, more of these owners will put their properties on the market and begin their search for a new home.

Investor-owned properties, namely condominiums, could also add supply to the market over the next year or two, as mortgages come up for renewal and owners choose to sell rather than renew at a higher rate, especially if their tenanted properties are not producing positive cash-flow. This, in addition to new legislation that incentivizes the development of purpose-built rental properties, could add some much-needed inventory to the entry-level market. However, it will not be enough to put downward pressure on prices.

Royal LePage’s forecast is based on the expectation that the Bank of Canada has concluded its interest rate hike campaign and the key lending rate will hold steady at 5% through the first half of 2024. The central bank is predicted to start making modest cuts as early as spring next year, though late summer or fall is more likely. Meanwhile, several major financial institutions have already begun offering discounts on fixed rate mortgages.