With BoC interest rate cuts likely, more Canadians will house hunt early this year
Experts predict that the Bank of Canada (BoC) will likely lower its interest rate this year, making the dream of home buying a little more realistic for Canadians again.
Royal LePage just dropped its highly anticipated annual real estate forecast. Expert insights show that the Canadian housing market will look quite different in 2024.
“We could see a brisk spring market, especially if fixed-rate loans continue to trend downward. This will spur significant activity,” said Randy Ryalls, general manager of Royal LePage Sterling Realty in Vancouver. “If we see the Bank of Canada begin to cut interest rates early in the year, competition among buyers could heat up quickly.”
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That competition is expected to lead to a 5% increase in the national aggregate home price from $789,500 in 2023 to $832,923 in 2024.
Among nine major cities, the most significant price increase is predicted in Calgary, where the aggregate home price could go from $663,500 to $716,580 in the last quarter of 2024 — an 8% increase.
Percentage-wise, four spots are tied for the lowest price increases — Greater Vancouver, Winnipeg, Halifax, and Regina. You might be able to find the cheapest homes in the latter city, where the aggregate price is forecast to hit $378,628 by Q4 of 2024.
Even with a lower price increase, Greater Vancouver homes will remain largely unaffordable over the $1.2 million mark. The Greater Toronto Area will pick up pace with a 6% predicted increase in the aggregate home price, touching $1,190,698, just behind Greater Vancouver.
BoC interest rate
Looking at different home types, experts say the price of single-family detached homes might increase by 4.4%. Standard condominiums will rise in price, too, but not as sharply as the former.
Year over year, condo unit costs could increase by 4%.
It is interesting to note, however, that so far, prices for both types of homes have declined every quarter nationally, with a 2.6% drop in single-family detached homes and a 0.6% drop in condos.
Over 80% of regional markets showed a decline each quarter, too.
Phil Soper, president and CEO of Royal LePage, doesn’t believe the Canadian housing market will rebound only once the BoC lowers its rates.
“The recovery will begin when consumers have confidence the home they buy today will not be worth less tomorrow,” he said. “We see that tipping point occurring in the first quarter, before the highly anticipated easing of the BoC’s key lending rate.”
Royal LePage estimates that 2.2 million mortgages will be renewed in Canada in the next couple of years, with a much higher interest rate than before.
If you’re struggling with high mortgage payments, the Financial Consumer Agency of Canada (FCAC) has created a helpful guide for people paying their mortgage when experiencing financial difficulties, and it offers some beneficial options.
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