What will the housing market look like in 2024?

By Mirjana (Mira) Markovic

If you are wondering whether the prices of homes will decline or rebound in 2024, whether interest rates will rise or stabilize, or if demand will outstrip supply, you are not alone. The year 2023, was the most capricious time for the real estate sphere with the continuous increase in the interest rates and the supply and demand on what seemed like a never-ending slippery slope. The Bank of Canada has raised the interest rates five times since July 2022, making borrowing more expensive and reducing affordability for many potential home buyers. It appears that the rising mortgage rates will continue to hinder the housing market and the Canadian economy for some time. Let’s take a closer look.

Various reports and statistics have recently been released from multiple sources discussing certain predictions for the real estate sphere in 2024. The focus of the article will be on the predictions from the Canada Mortgage and Housing Corporation (“CMHC”).

Brief Summary of the Report:

According to the CMHC report:

• A decline in prices of homes was observed between 2022 and 2023 however, it appears that the average prices will not track back to the pre-COVID-19 pandemic levels. It is predicted that the decline will stop in 2023.
• MLS prices of homes have dropped to approximately $643,325.00 in 2023. This is almost a 9% decrease from the average price of $703,875.00 in 2022. However, the prices are 14% higher than they were in 2020.
• It is predicted that prices of homes will start to rise again in 2024 due to the economy and immigration picking up.
• It is predicted that the average prices for homes in 2024 will be approximately $694,196.00 and $746,410.00 in 2025.
• If the high inflation and interest rates remain for a longer period, it is predicted that the average home prices will be 5% lower.

Predictions by Region

The Prairie Region:

• A boost of interprovincial and international migrants relocating to this region due to affordability has been noted.
• The average cost of a home in this region is less than $470,000.00.
• The region has a healthier economic outlook in general.
• It is predicted that this region will not experience any further decrease in home prices in the next couple of years as the real estate sector is already affordable.

Ontario, British Columbia, and Quebec:

• The above-noted provinces are on the opposite side of the spectrum of the Prairies.
• A decrease in housing occurred in 2023 for these regions. It is predicted that this trend will continue well into 2024.
• This is negative for these regions as they are the three provinces with the largest housing sectors.
• The vacant home tax has been introduced to combat the housing crisis in some of the regions. This is a new concept and it will take some time to operate before it can be determined if effective.

The Atlantic Region:

• Economy growth in 2023 was noted.
• It is predicted that the economy will continue to grow in 2024.
• The real estate sector is predicted to be between what is expected for the Prairies and what is predicted for Ontario, British Colombia, and Quebec.

Predictions by City

Toronto:

• A small price drop in the GTA was noted in 2023.
• It is predicted that the prices of homes will start to increase in 2024 and continue for the next couple of years.
• The elevated prices will make it difficult for first-time home buyers to purchase a property within the GTA.
• In the fourth quarter of 2022, the average household required 22% more disposable income than it was being earned to qualify for a mortgage within the GTA. This number is expected to continue rising in 2024.
• The average home price in Toronto is $1,082,179.00.
• The rental sector will continue to experience increase in rent.
• Vacancies will continue to decrease as prices of rent increase.

Calgary:

• It is noted that the rental sector has experienced similar trends to Toronto as affordability continues to decline.
• The rental sector will continue to experience increase in rent.
• Vacancies will continue to decrease as prices of rent increase.
• It is noted that the rental sector has tightened in 2023 and is expected to continue in 2024 as interprovincial and international migrants relocate to Calgary.
• It is also noted that the current high mortgage rates will cause many to remain renters for a longer period.
• Prices of homes have increased by 6% in 2022.
• It is noted that the demand for single-detached homes has decreased in 2023. The demand has shifted to condominiums and townhomes in 2023. This trend is predicted to continue in 2024.
• The average price of a home is expected to remain between $504,500 and $541,600 in 2024.
• Pre-construction is expected to cool as expensive financing is the leading driver that is making it difficult to launch new projects.

Regina:

• It is noted that the housing market has experienced a bit of a cooldown in 2023.
• It is expected that housing prices will start to climb in 2024 and 2025 as more people start to show interest in single-detached homes.
• A 2% decline in prices was noted in 2022 and a 6% decline in sales compared to 2021.
• Employment has started to rise which has assisted with the economy. It is predicted that this will lead to higher demand for housing.
• It is predicted that due to the positive housing market and the continuous interprovincial and international migrants relocating to Regina, the housing demand will continue to see a boost in 2024 and the years to come.

Halifax:

• It is noted that Halifax has a low number of homes that are currently in the market to be sold. The prices will continue to rise in 2024 and in the next couple of years.
• Pre-construction has seen a drop however, this is expected to change in 2024 and 2025.
• The average price of a home in Halifax is $528,200.00.
• The rental sector will continue to experience increase in rent.
• Vacancies will continue to decrease as prices of rent increase.

  Vancouver:

• It is noted that prices of homes in 2022 have peaked but have bottomed out in 2023 however, it is predicted that the prices will start to increase in 2024 again.

• The rental sector will continue to experience increase in rent.
• Vacancies will continue to decrease as prices of rent increase.

• It is noted that many first-time home buyers have chosen to delay purchasing, therefore, resorting to rent as a more affordable alternative.
• The population in Vancouver grew by 80,000.00 in 2022, while only 4,000.00 rental vacancies were created.

Montreal:

• Similar trends to Toronto are predicted.
• It is noted that it has been difficult to restore affordability in Montreal.
• The average home price in Montreal is $612,300.00.

Concluding Remarks:

The Canadian real estate sphere is a mix of various regional markets, each with its advantages and disadvantages as noted above. Across the country, potential purchasers are choosing to remain on the sidelines as they are waiting to see what will happen to the Canadian fluid economy and real estate market in the New Year. First-time home buyers, those who are looking to purchase recreational properties, downsize, or purchase a larger space are delaying entering into the housing market for non-essential purchases and prefer to hold on to their current homes and/or rental properties rather than risk higher mortgage payments.

Even though we may see a decrease the home prices in the New Year, it is predicted that this trend will not last long as a peak is inevitable. The wait-and-see approach has proven to be a popular choice among Canadians at this time however, we will have to see if this approach will change in 2024.

I hope that this article has provided you with some helpful information. If you have any questions, please do not hesitate to contact me at mira@sorbaralaw.com.

The full report can be found here.