Mid-Year Market Update for 2024: What Buyers and Sellers Need to Know

Once again, the number one story in real estate this summer is mortgage rates. But unlike last year, when we saw market-chilling rate hikes, economists now expect market-quickening rate cuts—possibly starting as soon as this month.[1]

That means the housing market is about to get interesting. If fixed mortgage rates continue to drop in anticipation of a lower policy rate, more buyers are expected to show up looking for a deal before home prices take off in 2025 and 2026.[2]??

Meanwhile, listings are already on the upswing and homeowners are feeling increasingly optimistic that their home values will rise over the next year, per a new Canada Mortgage and Housing Corporation (CMHC) study. So we could see more sellers-in-waiting regain the confidence to list their homes at strong but realistic prices.[3,4]

What does it all mean for you? Read on for our take on this year's most important real estate news and get a sneak peek into what analysts predict is around the corner for 2024.

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MORTGAGE BORROWERS SHOULD FINALLY GET SOME RATE RELIEF

After more than a year of shifting forecasts and delays, it's finally happening: the Bank of Canada's first rate cut since 2020 is nearly here. The central bank is gearing up for two back-to-back meetings this summer to discuss monetary policy, plus three more meetings before year-end. Most experts think we'll see our first rate cut as early as June 5 or in late July.[5] But with inflation still elevated in the U.S. and the job market showing surprising gains here at home, the total number of rate cuts we'll see in 2024 is anyone's guess.

What does it mean for you?? If you're a buyer, ask us to refer you to a mortgage broker so you can lock in a competitive rate. It's been a tough year for mortgage originations, so lenders are hungry for new business and may be more willing to cut you a deal.

PENT-UP DEMAND COULD SOON BURST INTO VIEW

Home sales activity is expected to pick up once rates recede.[2,6] According to new research from BMO, 72% of aspiring homebuyers say they're waiting for lower rates before they get serious about shopping for a home.[7] New federal measures could also juice the housing market: New homebuyers, for example, can now borrow up to $60,000 from their RRSP to fund a down payment, and soon first-time buyers with insured mortgages will be allowed a 30-year term if they purchase new construction.[8]

What does it mean for you?? Increased competition almost always means faster home sales—and a need for quick decision-making. Whether you're a buyer or seller, make sure your paperwork is in order and you’re prepared to act when the time is right. We can help.

PROPERTY VALUES WILL CONTINUE TO INCREASE

Today's home prices are down significantly from where they were toward the tail end of the pandemic, however, that's probably not going to last.[9,10] In fact, the CMHC thinks home values could return to peak levels as early as next year before hitting a record high in 2026.[11] That doesn't mean, though, that home sales will be so strong that sellers can expect the same level of price gains they saw before. As researchers at TD Bank note, rate cuts will help boost prices for now, but “affordability pressures will likely keep the gains from being even stronger.”[10]

What does it mean for you?? Sellers will need to be realistic with their asking price—especially if they're looking to close quickly. Buyers might not want to wait long if they can afford to make a deal. Increased competition could lead to a bigger-than-expected price surge.

EVEN WITH MORE HOMES FOR SALE, INVENTORY WILL BE TIGHT

The spring market saw a notable jump in listings, and more sellers are expected to enter the market as rates decline.[3,10] According to a survey by Dye and Durham Ltd., more than a quarter of Canadians have been holding out for a rate cut before buying or selling a home.[12] But even if more homes come to market this summer and fall, the total number of Canadians who want to buy a home will still surpass the number of homes available. So both the resale market and new home market are likely to remain squeezed for some time.[13]

What does it mean for you?? With inventory increasing and many prospective homebuyers still priced out of the market, buyers who can afford it may be able to retain some bargaining power. We can help you negotiate a great deal.

WE’RE HERE TO GUIDE YOU

It can be useful to get a high-level overview of what's happening across Canada, but the most important factors behind most real estate transactions are local. Therefore, on-the-ground expertise is essential. If you’re considering buying or selling a home, contact us for a free consultation so we can help you build a successful plan.

The above references an opinion and is for informational purposes only.? It is not intended to be financial, legal, or tax advice. Consult the appropriate professionals for advice regarding your individual needs.

Sources:

1.???? Nesto.ca

2.???? MPA Magazine

3.???? RBC

4.???? CMHC

5.???? Global News

6.???? RBC

7.???? BMO

8.???? Forbes Advisor Canada

9.???? CREA

10.?? TD Stories

11.?? CMHC

12.?? Dye and Durham

13.?? TD Stories