Canada’s real estate landscape helps brokers and private lenders, as well as buyers and sellers, understand national trends that influence local markets. It’s important to understand the different factors that affect Canadian real estate and the predictions experts make about where these trends are going.
There are some similarities between trends in bigger cities like Vancouver and Toronto and differences when you study real estate numbers across the country in smaller places.
Different Factors Influencing the Real Estate Markets
Several factors influence real estate markets in Ontario and across the country. For example, The Canadian Real Estate Association (CREA) predicts that interest rates will continue impacting property sales this year and into 2025.
They note that many national markets have been affected since the rates were hiked last year. Some financial markets are even predicting a cut of 50 basis points by the end of 2024. The expectation is that lowering interest rates can pump up demand and be a factor in price increases going forward.
Differences Across Regions: From East to West
Research shows that British Columbia and Ontario have the highest prices ( Global News, Feb 2024). Their reports also show that areas like Hamilton/Burlington led any national gains in the GTA and Greater Vancouver and the Fraser Valley in the West.
The Prairies were also experiencing excellent sales and increases in home prices. Eastern Canada is also showing positive growth signs, even though Prince Edward Island is lagging behind.
It’s also interesting to note that Ontario has one of the highest average home prices across all of the provinces. The only province that’s ahead of it is British Columbia. That’s not unusual, considering that two of the biggest cities in the country reside in British Columbia and Ontario. Those are, of course, Toronto and Vancouver.
Other Factors Influencing the Real Estate Market
One of the other factors influencing Canada’s real estate markets are persistent supply shortages, mostly in major cities. In the Western part of the country, like Alberta, there’s a strong projected need because of economic growth, according to the Canadian Mortgage Housing Corporation (CMHC).
These shortages can have several effects, including pricing first-time home buyers out of a rapidly inflating market. They can also drive people away from urban markets to more affordable regions outside of big cities.
Knowing where the pundits say the real estate landscape is going nationally is also essential.
Predicting the Future: What Lies Ahead for Canadian Real Estate?
Many experts predict that interest rates will continue to overshadow Canada’s housing market in 2024. In the early part of the year, RBC predicts that softer prices and slower activity will continue if the Bank of Canada maintains its policy rate.
Renewal Payment Shock Ahead
There’s also a feeling that there’s going to be a renewal payment shock ahead for Canadian real estate. One prediction is that fixed-rate mortgage holders will get hit hard. The prediction here is that some homeowners may need to sell their houses, but once again, RBC sees a wave of these distressed sellers as mostly contained.
Some of the other predictions come from PWC Canada, which feels that multi-family residential housing will be on the uptake. These experts also predict that the affordability crisis will continue to get worse, especially because of population growth.
Local real estate brokers and private lenders will need to consider all this information when they filter everything down into their markets. For bigger markets like those in Toronto and Vancouver, this renewal payment shock and other trends can be mitigated if the interest rate starts to fall by mid-2024.
The Role of Local Real Estate Experts in Navigating National Trends
According to the Price Waterhouse Cooper research, there are three national top opportunities that real estate experts can filter down into their local markets. These are suggested as top opportunities.
- Multi-family residential housing is still a safe bet because it has solid fundamentals. Federal government announcements of GST relief have helped new construction projects.
- There’s even a retail-based property segment that makes this list. This is an excellent investment opportunity that warrants promotion. Emphasis should be on grocery anchor-type developments serving communities that are already seeing strong population growth.
PWC asserts that the industrial segment of real estate will be the prime focus for local real estate agents, particularly those in Toronto and Vancouver. This is because there’s a low vacancy rate across the country, which creates opportunities.
Overview of Canada’s Real Estate Market
The national real estate market is gradually recovering, reflected in local numbers. Data from the Canadian Real Estate Association for March 2024 shows a bump in monthly transactions of 1.3% but a drop of 6.4% in the 12th month numbers compared to 2023. That translates into an average sold price across the country of $698,530.
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