It is an interesting time in the real estate market. This month, the Bank of Canada (BoC) announced a third straight hold on interest rates, while the Federal Government extended its ban on foreign buyers into 2027. At the same time, demand for home ownership is strong, but with limited selection, we’re not seeing the activity we did prior to 2023. 

TRREB released its January sales figures this morning, and unit sales are up year-over-year…a promising start to 2024. But that aside, the items that stand out to me are the sales mix and the stickiness of prices, which remain virtually unchanged from this time last year. If we look back to the peak market in February 2022, 12% of transactions on the MLS were over $2M. By comparison, last month, that figure was closer to 4.5%. At the same time, over 70% of sales are occurring between $600,000 and $1.5M, so that’s really the sweet spot of the market as we kick off the new year.  

Looking at the lending environment, there have now been three straight announcements by the BoC where the rates have held. If we go back 12 months ago to January 2023, after the Bank had increased rates 50-basis points, 75-basis points, 75-basis points, 50-basis points, I remember thinking, “if they could only just give us a 25-basis point increase.” Ultimately, the Bank implemented a 25-basis point increase and people flooded to the market. Prices started to rise, unit sales were up, listings were down, there was no inventory…so it should be clear to everyone what will happen when a greater segment of the buyer pool regains its confidence. 

Now, when will that be? Is it going to be after that first quarter-point reduction? Only time will tell, but here is my prediction. We’re going to be looking back between January and June of 2024 as the time of opportunity for buyers. In June, when the rates come down, this market is going to return to where it was. They’re at 5% now, and CIBC’s Deputy Chief Economist Benjamin Tal has said that by December they could be as low as 3.5%. 

There is massive demand; this hasn’t disappeared. There are nearly 500,000 new immigrants to Canada, the bulk of which come to Ontario, including 800,000 temporary workers and foreign students. They all need housing. Then, factor in the pent-up demand from local households that have been delaying their home buying. Plus, we have not magically resolved our supply issues. 

So, we know what’s going to happen. When the buyers come off the sideline, unit sales will rise, the limited supply that is available today will disappear, and prices will go up. If you are looking to get ahead of that, now is the time. Now is the opportunity.

We look forward to supporting you with all your real estate needs. As always, I would encourage anyone reading this to reach out to me at (416) 723-2383, or to contact a member of our sales team. We have been in business since 1957 and bring a wealth of experience to changing real estate markets.