MARKET INSIGHT FOR THE WEEK ENDING August 23rd, 2024

The real estate market can be unpredictable, but there are definitely moments when conditions align favourably for buyers, and this could be a good opportunity to buy a first home. As weak as housing affordability is right now, aspiring young buyers may never see a better time to buy.

Mortgage rates have declined lately, and home prices are moving sideways on an average national basis. Short of a crash that sends prices reeling, this is what passes in Canada for a buying opportunity.

The question is how long this moment lasts. After the last set of national data on residential resale homes, the Canadian Real Estate Association jumped on expectations for lower interest rates and made this startlingly unequivocal prediction: “the forecast for a rekindling of Canadian housing activity going into 2025 has just gone from a layup to a slam dunk,” said Shaun Cathcart, CREA’s Senior Economist.

Other voices were more cautious, but there’s still a consensus that a housing rebound lies ahead. Anyone considering a first home should be mindful of this outlook. If housing rebounds with any enthusiasm, today’s market conditions just might be a generational opportunity to buy a home.

In many big cities, houses are very far from affordable for first-time buyers without high incomes or high-income parents. Also, a lot of people feel terrible about their finances after the last couple of years of high interest rates and inflation.

But Canada’s housing market has a few things going for it:

• The first is the religion-like belief that owning a house is a flat-out, financial win. This has not been the case for those who bought at the market peak in 2021-22, but Boomers and even GenXers have cleaned up on home equity in the past decade or more.
• Falling interest rates are a direct support for housing. This September 4th we could possibly see another interest rate cut which could finally stimulate homebuyer demand.
• The July numbers for the resale market suggested the two recent 25-basis rate cuts to date haven’t done much so far to revive housing, but mortgage rates have come down to the point where the currently popular 3-year fixed rate mortgage can be had for as little as 4.5% to 4.8%.
• Other supports for housing include population growth and the economy’s resilience so far in avoiding recession. As of August 20th, Canada’s inflation cooled to a 40-month low of 2.5% in July.

As ever, the outlook for housing varies a lot between cities. The MLS Home Price Index showed Toronto and Vancouver were down 5% and 0.8%, respectively, on a year-over-year basis in July, while Calgary was up 8% and Edmonton was up 7.2%. Canada-wide, the index was down 3.9%.

Today’s buying opportunity is based on modest price declines in some locations combined with falling mortgage rates. The overall improvement in affordability is modest, but at least it’s something. In a more robust housing market, it’s likely that demand from buyers would result in price gains that more than offset lower borrowing costs.

ABOUT BOSLEY REAL ESTATE LTD., BROKERAGE

Bosley Real Estate Ltd. is a full-service, 4th generation brokerage operating since 1928 with offices serving Toronto, Niagara, Waterloo Region, Southern Georgian Bay, St. Catharines,? and Northumberland. With over 250 agents in residential and commercial real estate, the firm has built a reputation on trust, respect, and integrity selling and leasing property throughout Ontario. Bosley Real Estate is also recognized internationally through an exclusive affiliation with Leading Real Estate Companies of the World?. This prestigious partnership connects the brokerage to a global network of 130,000 real estate professionals in 70 countries. Headquartered in Midtown Toronto, President, and Broker of Record, Christan Bosley continues to innovate and maintains the high standard of excellence forged over a century.