Is Canada's housing market set for a resurgence in 2024?

Homebuying appetite remains high despite affordability challenges, suggests report

Is Canada's housing market set for a resurgence in 2024?

Affordability struggles and rising interest rates are continuing to pummel Canada’s housing market – but the appetite of prospective buyers to purchase a home remains largely undimmed, according to a new report by real estate giant RE/MAX Canada.

The company’s housing market outlook for 2024 showed that 73% of Canadians continue to view home ownership as the best form of investment, showing no change from the same time last year despite an uncertain economic climate and the ever-climbing cost of purchasing a property.

While those challenging economic factors are likely to weigh down on activity and sales across the national housing market moving into 2024, RE/MAX’s network of agents and brokers on the whole expect a decent year to come, the company said.

Sixty-one percent (61%) of regions surveyed believe unit sales will increase next year, the report indicated, with national average residential sale prices likely to see a modest uptick of 0.5%.  

Christopher Alexander (pictured top), RE/MAX Canada’s president, told Canadian Mortgage Professional that while the Ontario and British Columbia markets were set to labour under sluggish activity for much of the year, other regions including Alberta, the Prairies and parts of Atlantic Canada may pick up some of that slack.

Nor is the outlook for the two traditionally hottest real estate markets in Canada as gloomy as might be believed, he added. “BC and Ontario will continue to have challenges in certain areas, but I’m also not totally convinced that it’ll be as challenged as some might think,” Alexander said.

“All we really need is a good bout of consumer confidence and I think things will change in a big way because there’s pretty serious pent-up demand, and that’s really evidenced by the research we conducted. The amount of people that believe in real estate as a long-term investment, that hasn’t changed in two years.”

Are homebuyers poised to re-enter the housing market when rates drop?

The Bank of Canada is scheduled to make its final interest rate announcement of the year on Wednesday (December 6), with no further movement expected on its benchmark rate for a third consecutive decision.

With attention already shifting to when the central bank could begin to cut rates in the year ahead, Alexander said plenty of potential buyers could be waiting in the wings to enter the market again once rates start to drop.

“I think that’s really what the underlying feeling is,” he said. “I talk to realtors on the ground, and most of them say they’ve got a lot of people that are just waiting to see how things play out.”

A noteworthy housing market trend of recent years has been the growing popularity of markets away from the in-demand but pricey cities of Toronto and Vancouver.

That could be set to continue in 2024, particularly with little indication that home prices are set to fall through the floor across the country anytime soon.

“Certainly, I think that what we’ve experienced in southern Ontario and even the Lower Mainland in BC is peripheral markets that [present] perhaps a similar type of offering as far as amenities are concerned,” Alexander said. “They’ve really grown.

“Case in point: Kitchener/Waterloo and Ottawa. They’ve really benefited from Toronto’s big growth in average price. And people have looked to other cities to settle in that offer good employment, good schools and hospitals, and things like that.”

High-rate environment contributing to hesitancy among some buyers

While Canadians continue to view real estate as a strong investment, as long as rates remain high it seems current economic turbulence may be playing some part in dampening their enthusiasm to enter the market.

Over half (54%) of respondents to the RE/MAX survey said they were concerned that interest rates, which have remained resolutely high throughout 2023, would impact their ability to engage in the real estate market.

Millennials were the homebuyer cohort that would be most severely impacted by the prospect of higher rates for longer, according to the survey: seventy-three percent (73%) of that segment said their prospects of entering the market were tied to the direction of interest rates.

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