A few solid rate cuts from the Bank of Canada this year alleviated stress for aspiring homeowners and certain mortgage holders, but residential real estate is about to get even more expensive.
On October 23, the central bank made a jumbo-sized cut, lowering the policy interest rate from 4.25% to 3.75%. Such a low has not been seen since December 2022.
Higher interest rates helped bring home prices down for a while, and inversely, new cuts have encouraged a rebound in the housing market.
The real estate organization’s experts forecast a seller’s market next year, with the national average residential price likely to increase by 5%.
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Edmonton, AB, and Simcoe County, ON, are in the lead with an estimated 10% price increase. The Truro and Colchester region in Nova Scotia is just behind the two, with an 8% rise expected.
Home sales could also rise by up to 25% in 33 of the 37 areas Remax studied.
Greater Vancouver, BC, and Simcoe County, ON, will be seller’s markets, with 20% and 25% bumps in home sales, respectively.
Several other popular Ontario regions will also see significantly heightened sales, with Durham expecting a 15% bump — the second highest in the province — followed by Toronto (12.5%), London (10%), and Kingston (10%).
Homeownership largely “out of reach”
A seller-dominated real estate and housing market is cause for concern if you’re looking to buy a home, but it should not necessarily squash your dreams. Lower interest rates are still a big plus.
According to future price estimates, you’ll still be able to buy a home under $400,000 in several regions, including Thunder Bay, Kenora, and Sault Ste Marie in Ontario, Regina, SK, Fredericton and Saint John, NB, all of Prince Edward Island, and St. Johns, NL.
“While affordability challenges persist, the sequential interest rate cuts and changes to the mortgage stress test are a much-needed reprieve for those looking to get into the market,” said Remax President Christopher Alexander.
As of November 21, the Office of the Superintendent of Financial Institutions (OSFI) no longer requires federally regulated financial institutions to apply the minimum qualifying rate (MQR) when seeking a straight switch for uninsured mortgages.
This announcement came just as the new loan-to-income (LTI) limits on uninsured mortgage portfolios were introduced.
“While both measures are intended to reduce mortgage lending risks, the LTI limits are expected to contain overall residential mortgage credit risk to institutions,” stated the OSFI.
In September, the Department of Finance announced it would expand eligibility for 30-year mortgage amortizations to all first-time homebuyers and Canadians who purchase new builds. Starting December 15, 2024, first-time homebuyers and those buying new builds will be eligible for the 30-year mortgage loan.
🧵We’re introducing the boldest mortgage reforms in decades to help more Canadians buy and afford a home.
Here’s what we’re doing:
— Chrystia Freeland (@cafreeland) September 16, 2024
The Remax report highlighted that half of Canadians feel more optimistic about the housing market than last year. However, with 60% of Canadians owning their home, this is hardly surprising.
Twenty-eight percent of Canadians rent, and 8% don’t own or rent.
According to a recent Leger survey, 88% of renters say “the goal of owning a home in Canada has become out of reach.” The same survey reports that 84% of Canadians say buying a home “feels like a luxury.”
Per Remax, 43% of Canadians feel homeownership remains out of reach, and 20% say they can “no longer afford to own a home.”
What are your thoughts on this 2025 forecast? Share your thoughts in the comments below or email us at [email protected].