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2024 Housing Market Forecast

Here's a look at what's going on with Canadian housing markets.

Will interest rate drops raise home prices? What places in Canada can offer better affordability? It is a buyer's market? Read on for some answers.

May 17, 2024

Updated from May 3, 2024

ARTICLE CONTENTS

Sluggish spring housing activity.

Home sales were down, prices were relatively stable, and inventory increased in April 2024. A seasonal surge of spring buyers has yet to fully emerge, held back by higher interest rates and delayed rate-drop timing.

National home sales in April declined by 1.7% month-over-month and were more than 10% below the 10-year average:

  • New listings rose by 2.8% (they dropped 1.6% in February)
  • The MLS® Home Price Index (HPI; not seasonally adjusted) increased about 1.0% from last month, down 0.9% year-over-year (seasonally-adjusted MLS® HPI was flat from last month)

CREA notes that this year's spring market has been much less enthusiastic on the demand side. When rates finally drop, will housing markets come back to life?

National Average Home Price Index

$735,700 in April 2024

A decrease of about 0.9% year-over-year, and lower by about 14% from peak prices in March 2022.

(as per MLS® HPI Aggregate Composite Benchmark, not seasonally adjusted)

“An anticipated upturn in housing market activity when rates drop is a double-edged sword. While on one hand, it suggests increased affordability for potential buyers, on the other, it risks being offset by a corresponding surge in home prices.”

– Dan Eisner, TNM Founder and CEO

Door-to-Door: Housing Forecast for 2024

Interest rate drops are expected to start in June or July. The industry is huddled at the gate — will activity burst forth? Will it push up home prices?

Home sales remained relatively flat from last month — demand hasn't materialized enough to deplete the increased inventory and drive up home prices. Some buyers are in the market — jumping in before rates ease and a potential surge makes getting a home more difficult. But home affordability remains a tough hill to climb for many looking to make their move.

Certain centres, like Calgary, are bucking the trend, complete with bidding wars as the rapid population increase competes for existing supply.

When the gates finally open, experts predict home prices will rise again this year. Royal LePage recently hiked its prediction to a 9% national increase by year-end and sees Toronto toppling Vancouver's 'Most Expensive in Canada' standing.

Canadians are caught in a cat-and-mouse game of whether interest rates will fall enough to improve affordability or if budget challenges across the table will keep a lid on demand to keep prices stable.

What could keep home prices down?

Tight home affordability in Canada has backed off a bit in the last couple of months as fixed mortgage rates and home prices cooled slightly. However, home prices in Canada are still the highest of the G7 countries (led by the major city centres of Vancouver and Toronto).

Here's what may help keep price growth in check to either deter demand or increase supply:

  • High Canadian home prices in general, compelling many buyers (including first-timers) to hold off
  • Increasing household non-mortgage debt
  • Higher qualifying stress-test rates
  • Higher city property taxes hitting budgets and mortgage-approval ratios after this spring
  • A wave of renewals coming in the next 1-3 years will see homeowners paying more for their mortgage (i.e. less spending room for a new house)
  • For investors, if higher mortgage payments aren't passed onto renters, they may need to sell, which could increase listings
  • Curbing short-term rental property ownership through restrictions and tax deterrents to release more primary housing
  • Increased efforts to spur multi-housing and rental construction

"Single-family building permits are cratering right now, and that means less new supply on deck over the next couple years."

– Ben Rabidoux, Housing Market Analyst, Edge Analytics, December 2023

A national housing crunch doesn't bode well for the future of Canadian home prices.

Over last year, we saw a whopping 46% increase in Canadian newbies waving the red maple leaf. Our growing numbers, combined with fewer housing starts, will only serve to restrict the future number of homes that can be available to buy, adding pressure for home prices to go higher, not lower.

Factors that will affect the pace of homes being built:

  • Higher building costs
  • Higher interest rates
  • Restrictive government taxes and legislation
  • Fewer available labourers

Federal, provincial, and city governments are furiously trying to clear the road to increase starts or increase the incentive to increase starts. NIMBYism (not in my backyard) is another major obstacle to slap up multi-dwelling housing in existing neighbourhoods.

Many forces in Canada seem to be at odds, interfering with the pace of the Canadian housing inventory needed to keep up with current and future needs. We're not talking here about housing for low-income needs, which is also very urgent and essential — we're talking about enough housing to meet the general demands of an existing and growing population.

Canada is already down over 5 million homes needed by 2030 (on top of annual construction). The lack of inventory won't help stabilize home prices unless reasonably addressed in the coming years.

Rate drops and home price drops: can they co-exist?

One can hope (though it's likely destined to be an unrequited love).

How home prices are viewed depends on the perspective: Many buyers want prices to go down, but sellers want them to stay higher (for obvious equity reasons).

Yet, home affordability is at an all-time low in Canada, with high home prices (still down only about 14% from the 45% peak of March 2022), higher interest rates, and elevated prices all around.

Here's what can help rate and price drops co-exist:

  • The moment rates drop, buyers entering the market could meet plenty of sellers listing to match demand
  • Despite rate drops, buyers' budget constraints could keep them out of the market, or unable to afford bidding wars
  • If more sellers suddenly (and continuely) list without a corresponding surge in buyers, prices could decline as sellers look to unload their properties

It's not just buyers waiting on the sidelines. Sellers have to consider renewal rates if they want to downsize for better affordability, or are hoping for the best home prices to offload previous short-term rental or investment properties that are no longer financially feasible.

Cancelling each other out in a rush to buy and sell would be the best scenario to keep prices from skyrocketing as rates drop.

"The country's population grew by more than 430,000 during the third quarter, marking the fastest pace of population growth in any quarter since 1957."

– 'Canada's Population Grew by 430,000 in Q3', CTV News Article, November 19, 2023

More housing tidbits:

  • In Q4 2023, Canada started construction on only one new single-family home for every 25 people added to the population
  • But in January 2024 in Calgary, housing starts hit record highs
  • "There will be a growing gap between [prices of] detached houses and condos." — Globe & Mail, Benjamin Tal (CIBC)
  • Over 72% of aspiring homeowners are waiting until interest rates drop before purchasing a home (recent BMO survey)
  • Are home prices under $500K vanishing across Ontario?
  • Roughly 48% of Canadians are considering a move to a smaller city to get more home value for their buck (in a CIBC poll)
  • About 49% of Canadians said they would consider buying a home through non-traditional means (like rent-to-own and co-ownership) in a recent Re/Max survey
  • 'No more GST' to build rental buildings has already spurred construction activity, which may (eventually) help alleviate housing pressure demand
  • Mortgage arrears jumped by 11% nationwide over the past year
  • Property taxes are being hiked in many Canadian city centres at more than double the inflation rate
  • Canada needs to build 5M extra units by 2030 on top of annual construction (Benjamin Tal, CIBC deputy-chief economist, Feb. 6, 2024)
  • In a win against NIMBYism (not in my backyard), Calgary recently passed a (controversial) major residential rezoning policy allowing housing density to potentially move in next door

How much home can you afford?

Use our great calculator below for an idea, then give us a shout for your numbers.

Are we in a housing bubble?

Despite higher rates, national average home prices in Canada are among the highest in the G7 countries. There's been talk of housing bubbles here for years. Yet, nothing has burst (yet), and homeowners take tremendous pride in owning a home, riding local price waves up or down.

To help you time your home-buying or selling decisions, here's a snapshot of our nation's current housing market trends and a look ahead to what experts say is coming to a market near you.

What's hot in housing?

April 2024 — The three Canadian centres with the highest average MLS® home prices are:

  • Oakville-Milton, ON – $1,306,200 (+$15,400 from last month)
  • Greater Vancouver, BC – $1,205,800 (+$9,000)
  • Lower Mainland, BC (including Burnaby, Richmond, Surrey and New Westminster) – $1,138,800 (+8,200)

Based on the MLS®HPI composite benchmark (not seasonally adjusted)

Housing underdog? Some of the best home values in Canada.

April 2024 — The six Canadian centres with the lowest average MLS® home price.

We're not saying you should (or could) move there, but you can dream about how much home you'd get for the prices.

  • Mauricie, ON – $269,800 (+$14,900 from last month)
  • Centre du Quebec, QC – $284,100 (+$2,800)
  • Fredericton, NB – $301,000 (+$8,100)
  • Saint John, NB – $301,100 (+$12,800)
  • Sault Ste Marie, ON – $301,200 (+$5,700)
  • Regina, SK – $319,800 (+6,700)

Based on the MLS®HPI composite benchmark (not seasonally adjusted)

Buyer's or seller's market?

BALANCED – National SNLR (sales to new listing ratio) eased to 53.4% in April (from March's 57.4%)

Sales were down and new listings were up. Listing levels are still expected to rise as sellers who held back over the past few months enter the market this year.

  • Listed inventory hit the highest level since the onset of the pandemic for the most balanced national market conditions since before then
  • The highest national SNLR so far was 67.9%, reached in April 2023.
  • The long-term average for this national measure (according to CREA) is 55.1%

Why is the market balance tightening? Enough buyers entered the market nationally, but enough sellers didn't list to meet demand. Housing activity is expected to pick up, though how the market will unfold in the coming months will likely hingle on interest rate events.

What is a buyer's market?

According to CREA (Canadian Real Estate Association), a strong buyer's market is when the sales-to-new-listings ratio (SNLR) is 40% or below.

At that ratio percentage, there are typically more properties for sale than buyers, offering more choice and bargaining power — especially in placing purchase offers with conditions that protect a buyer's rights and finances.

What is a balanced housing market?

When the SNLR falls between 40% and 60%, market conditions are considered 'balanced' in buyer demand, available listings, and sales levels that keep prices relatively stable, thus allowing reasonable purchase and sale terms.

The middle ground of housing competition — balanced markets can lean more towards the buyer's or seller's spectrum. And despite any prevailing national or local trends, a particular house, street or area can defy it (you know who you are).

What is a seller's market?

An SNLR of 60% or higher is a market that strongly favours the seller.

A seller's market means there are more buyers than sellers, and the properties sell quickly and at higher prices, giving the seller more power to set their price and terms of sale.

When the demand for housing exceeds supply, buyers often resort to a gamut of strategies to snap up a house before others, such as engaging in bidding wars or feeling pressured to place no-condition offers.