Despite previous years’ challenges, Canada’s housing market continues to remain competitive. Housing prices and buyers’ demand have risen steadily over the year, especially in hot markets in the Ontario province. However, with the increase in interest rates threatening the eagerness of motivated buyers, experts forecast a change in Ontario’s housing market momentum. Many are pondering if and when the housing market will crash in Ontario.
What is the current trend in Ontario’s housing market?
According to WOWA, the average home price in Ontario in Febuary 2024 experienced a relatively small price growth of $7928 from February 2023’s average price of $865,279. Transaction rates have slightly improved in the Greater Toronto Area. 757 more properties sold in February 2024 versus the 4941 properties sold in February 2023, however transaction volumes are still well below the volumes seen leading up to 2022. Although there has been some growth metrics show that the market has been more stable rather than hot throughout the last 12 months.
What should home sellers and buyers expect throughout 2024?
Increase in buyers
Many potential buyers have been waiting on the sidelines over the past few years. Higher average rates and uncertainty in the market have been keeping potential buyers hesitant. Some industry experts such as Royal Lepage CEO Phil Soper believe that upcoming potential rate cuts might reduce uncertainty and lead to increased demand from buyers waiting on the sidelines. Although there are some buyers that have been awaiting rate decreases before entering the market some of these buyers might further delay their purchase post rate-cuts if the unemployment rate continues to rise. Unemployment was at 5.8% in February 2024 (a 0.7%) increase from February 2023.
More Inventory
A variety of factors might lead to increased inventory over the remainder of the year. Firstly many 3-5 year term mortgages from before and during the pandemic are coming up for renewal over the year. Current higher than pandemic and pre-pandemic rates might pressure these homeowners to sell their properties to avoid increased payments. Additionally, many homeowners are been waiting for interest rate cuts before selling their properties. Potential upcoming cuts might lead to these homeowners listing on the market. Although the federal government has held the rates as of March.2024 data indicating a drop in inflation and increasing unemployment might lead the Fed to conduct rate cuts throughout the remainder of the year.
A reduced amount of new residents
The Canadian government plans on maintaining its aggressive immigration targets for 2024. The government plans to bring in 485000 permanent residents in 2024. This is a slight increase from the 471550 permanent residents admitted in 2023. Despite the slight increase in permanent residents Canada is dramatically reducing the amount of international students it is admitting into the country. Only 360000 international students will be admitted (a 35% decrease from 2023) in 2024. Additionally, Ontario will not be allocating any international student admissions to career colleges which might possibly reduce the influx of international students. This reduction in international student admissions might decrease demand for housing in core metro areas of Ontario over 2024.
Will Ontario’s housing market dip this year?
With all these contributing factors, a market crash is unlikely to happen in the coming months. While the housing landscape will notably shift this year, especially with the expected increase in inventory, Ontario’s housing market is forecasted to remain strong for most home sellers.
Need to sell?
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