Canada's Housing Market Awakens: Recovery Looms Amid Interest Rate Cuts!

A dramatic turnaround is on the horizon for Canada’s housing market. According to the latest forecast from Royal LePage, the country’s once 'sluggish' real estate sector is poised for a rebound as we head into spring 2025, propelled by a series of recent interest rate cuts.

In their third-quarter home price update released on Thursday, Royal LePage revealed that the national aggregate home price saw a year-over-year increase of 1.6%, reaching $815,500. However, this figure represents a 1.1% drop from the previous quarter, reflecting a stagnation in activity throughout the summer months. Encouragingly, sales volumes began to show signs of recovery in September, hinting at a potential revitalization.

Phil Soper, President and CEO of Royal LePage, noted that despite three cuts to the Bank of Canada’s overnight lending rate, the overall buyer demand remains subdued, particularly among first-time homebuyers and small-scale investors. 'First-time buyers are often more affected by interest rates and seem to be adopting a wait-and-see approach. With home prices stabilizing and interest rates declining, they feel there’s no rush to make a purchase right now,' he explained.

However, this is set to change. 'We predict that as property values begin to rise again, both first-time buyers and investors will come back to the market in significant numbers. With the Bank of Canada likely making further rate cuts this year, we expect that prices will appreciate quickly, diminishing the benefits of waiting for these buyers,' Soper added.

As more homeowners express readiness to sell, and buyers experience less competition than usual, the market recovery is becoming increasingly apparent. Royal LePage emphasizes that this recovery is likely to gain momentum into 2025.

A closer look at the figures reveals that the median price for single-family detached homes rose 2% year-over-year to $850,400, while condominiums only saw a 0.5% increase, reaching a median price of $590,200. On a quarter-to-quarter basis, however, both categories experienced slight decreases of 1.2% and 1.1%, respectively.

Excitingly, the Greater Montreal area demonstrated stronger performance, with home prices climbing 5.2% year-over-year in the third quarter, while Toronto and Vancouver markets remained largely unchanged, with modest gains of 0.7% and 0.5%. In the Greater Toronto Area (GTA), the average price was documented at $1,155,800, reflecting a 2.9% decrease from the last quarter.

Karen Yolevski, COO at Royal LePage, commented on the current situation in Toronto, emphasizing that despite a slow third quarter, there are signs of a responsive market. 'While sellers are returning more quickly to the market than buyers, they aren’t rushing to sell,' she stated.

Interestingly, the City of Toronto reported a year-over-year decrease of 2.3% in aggregate home prices, now settled at $1,128,900. Yet, the condominium market has shown unique dynamics, with a surge in new units contributing to dwindling prices, creating potential opportunities for first-time buyers.

Moving forward, Royal LePage projects a significant increase in housing activity as we transition into fall and beyond, particularly as lending rates continue their downward trend. The report anticipates that the aggregate price of a home in Canada could rise by 5.5% in the fourth quarter of 2024 compared to the same period last year.

With the Bank of Canada’s current key lending rate resting at 4.25%, the next interest rate announcement is set for October 23—mark your calendars! As this surge of optimism grows, those in the market might just find themselves preparing for a bustling spring housing season in 2025. The stage is being set for what could become one of the most active periods in Canadian real estate history!