This year, several trends have affected the housing market landscape for buyers and sellers. Some critical factors, such as affordability, have been an ongoing concern for some time. The same can be said for interest rates, which might be on the verge of reversing at some time in 2024.
People watching the market for insights and trends might have overlooked some of the less obvious factors. For example, an aging population is looking for a different set of features, and remote workers have a different set of items on their wish lists.
Current Trends Shaping the 2024 Housing Market
The big takeaway is that Ontario’s real estate market has balanced out in 2024. This means that demand and supply are roughly balanced.
Of course, one of the other significant issues facing the housing market is affordability. The crisis worsened in Q3 of 2023 with interest rate hikes. The Housing Affordability Index has fallen to its lowest rate since it began in 2011.
The Ontario Real Estate Association (OREA) has outlined some positive steps they think will make a difference. They highlight the fact the Ontario government has a goal of creating 1.5 million homes by 2031. OREA suggests that Ontario increase the number of skilled tradespeople allowed into the province. They also think that innovative solutions and programs that create new paths to homeownership should be funded.
Interest rates continue to shape trends for 2024. According to RBC’s thought leadership research, climbing interest rates have been the dominant factor in the last two years and have plunged the market into a correction. However, even a reversal expected sometime this year might be offset by affordability and supply issues.
There are quite a few different factors and trends shaping the housing market in 2024. One of the other big ones is immigration and how that affects the economy.
Impact of Global Events on the Housing Market
Increased borrowing costs result from global economic uncertainty. The uncertainty and instability have increased inflation, making a home more expensive. This instability has even pushed construction costs higher due to supply chain disruptions.
Geopolitical tensions and supply chain issues affect the overall housing supply.
According to the PWC report, other factors like climate change and natural disasters are influencing how people look for a home. More and more buyers are looking for houses with sustainable features in less vulnerable areas.
For example, Energy Star-rated appliances and green HVAC systems that reduce carbon footprints are desirable features. Properties that have a low wildfire risk are also sought after.
Economic and Demographic Influences on the Market
There are some other significant influences over and above the ones already mentioned.
- An aging population is also affecting the housing market. Assisted living facilities are in demand, and many seniors are downsizing to more manageable properties like condominiums. The concept of aging in place also has people renovating their existing homes and installing features like chairlifts.
- Population increases are driving demand. The number of people brought into the country in the first four months of 2024 has already eclipsed the record in 2023. This poses a big threat to the housing market because the numbers for the first four months of 2024 represent a 47% increase over the same period in 2023.
- Remote work is also impacting the market. The need for dedicated office space means people are looking for larger homes and are focusing more on rural and suburban areas. High-speed internet access and features like soundproofed rooms are high on remote workers’ lists.
One of the other influential trends is the spike in multi-generational houses, where seniors, adults, and children all live under the same roof. Having a good understanding of the trends in 2024 can help if you’re wondering what’s coming next.
Predictions for Housing Prices and Availability
First-time buyers will continue to see affordability as a significant challenge. According to PWC’s Emerging Trends in Real Estate 2024 report, the present trends in building homes and the current pace of immigration will be big factors affecting housing prices and availability.
The same report predicts that the need will evolve to distinguish between affordable homes and attainable housing suitable for both renters and home buyers. Both dwellings are in short supply but require different kinds of support, incentives and solutions. Although the government has announced plans to remove the Goods and Services Tax on rental housing projects, the prediction is that more needs to be done to make a difference.
Focusing on prices, TD Bank has predicted that house prices could drop on average by almost 10% in the first part of 2024. They are also predicting a gradual rebound as interest rates start to drop and more home buyers enter the market. The Canadian Real Estate Association (CREA) is predicting an uptake of 9% in home sales this year.
Several global situations will also affect the housing market. Some date back to the pandemic and its effects on the economy. Others are more recent but still have an effect.
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