It’s time to anticipate the mortgage market

Is a revival brewing in the Canadian real estate market? After a turbulent period characterized by high rates and rising property prices, signs of recovery are beginning to appear. The convergence of several key factors – including falling interest rates, stable home prices and a slowing economy – suggests the tide may be turning in favor of buyers. Here, we examine the current real estate market in Canada to identify opportunities and challenges for prospective buyers.

The main points

• Interest rates are gradually declining improving mortgage affordability and boosting consumer confidence.
• Home prices are showing signs of stability, providing predictability and encouraging potential buyers to return to the market.
• Despite the high levels of debt, the higher levels of savings could encourage a market recovery as economic conditions improve.

Ripple effect of rate cuts

AN recent interest rate cuts of the Bank of Canada has given hope to the real estate market. From June 2024, the loan reference rate of the country down three quarters of a percentage point (0.75%), thus reducing the rate favorable rates borrowers and, by extension, variable mortgage rates. With any luck, some news decline in the bond market leading to reductions in fixed mortgage rateswhich means mortgage payments cheaper, which could increase demand for real estate. Bond market forecasts point to further rate cuts in 2025, which could help more buyers to take the mortgage stress test and enter the market.

While recent rate cuts have had little impact on home sales, markets like Toronto are seeing an increase in listings, fueled in part by investors looking to offload their condos at the right time This increase in supply could translate into an advantageous price for buyers, especially those interested in condos.

The stability factor

One of the biggest hurdles for home buyers over the past couple of years has been the unpredictability of home prices. However, the market is starting to show signs of stability. For example, in OntarioAverage home prices fell 2.4% month over month in August 2024, while British Columbia saw a monthly decline of 2.2%. Despite these declines, overall stability is returning, especially in markets like Calgarywhich saw an increase in new listings, creating a fairer market.

In August 2024, theOntario and British Columbia have seen a significant decline in average purchase prices, creating a more favorable environment for buyers looking to enter the real estate market at lower prices. There Greater Toronto Area (GTA) has become a buyer’s market, as evidenced by a sales-to-new listings ratio (SNLR) of 39.7%, indicating that buyers currently have the upper hand in negotiations and preferences.

On the other hand, the Québec remains a strong seller’s market, with a strong SNLR of 65%, highlighting the continued demand for housing in the province. In the Atlantic regions, particularly Nova Scotia, the market is also shifting to sellers, with home purchase prices up 4.7% year over year, reflecting a healthy increase in property values ​​and buyer interest. continuous shopping.

THERE ARE Calgarythe housing market is rebalancing, with an increase in new listings helping to offset previously steep price increases. Even with this change, demand for housing remains strong, suggesting activity in the market will remain buoyant as buyers and sellers adapt to the changing landscape.

This new price predictability encourages potential buyers, who previously held back for fear of buying at inflated prices. Of course, according toCanadian Real Estate Association (CREA)National home sales are expected to increase 6.1% in 2024, with additional growth expected in 2025 as mortgage rates in canada continue to decline.

Everywhere Canadamany markets, even in big cities like Québec etc Edmontonoffering the charm and amenities of urban living at prices much lower than in major markets like Toronto, Vancouver or Calgary. For the first customers (FTHB)saving up for a solid 20% down payment can take decades in the most expensive markets. On the other hand, prospective buyers can reach their goal in less than five years in more affordable markets, making the dream of owning a home that much more attainable.

Demand pent-up and savings rising

Many prospective buyers were waiting for favorable conditions to enter the market, contributing to an increase in demand. As borrowing costs fall, more buyers are getting pre-approved, signaling an upcoming increase in market activity. In August 2024 only, houses for sale in canada changed so far +4.8% compared to yesterday.

During the pandemic and subsequent economic uncertainty, Canadians increased their savings significantly. With the savings rate at its highest level in nearly three decades, many people now have the financial ability to make large down payments. According to the Canada Mortgage and Housing Corporation (CMHC)financial preparedness could translate into greater purchasing power as mortgage interest rates shrinking.

Address the Mortgage Stress Test

Although the market outlook is improving, first customers (FTHB) they still have to accept the challenge of success mortgage stress test. The current test requires buyers to qualify for their benchmark or contract rate plus two percentage points (2%), which remains a major hurdle for many. However, as interest rates fall, this barrier could become less of a barrier, allowing more people and families to qualify for mortgages in the coming months.

Is now a good time to buy?

The big question for many potential buyers is whether now is the right time to start. Although it is impossible to predict the future with certainty, the current conditions present a unique opportunity for prospective buyers:

Interest rate: With the inflationary pressures and the fall in interest ratesthat could mean more affordable mortgage payments and easier qualifying.

Price stability: With stable house prices and moderate declines in some areas, buyers can better plan their budgets without fear of sudden and unpredictable price increases.

Market Dynamics: An increase in listings, especially in larger cities, could lead to further price changes, creating opportunities for buyers.

The ACI expects the national average home price to increase 2.5% in 2024 and an additional 5% in 2025, indicating that the current price decline may not last long. Therefore, those who act quickly may get better deals than those who wait until the market picks up again.

Take the time

The Canadian real estate market showing signs of careful recovery. Rising unemployment and moderate economic growth should give most households the flexibility to keep borrowing costs within their budgets. Declining mortgage interest rates, stable home prices and pent-up demand are creating a window of opportunity for buyers waiting on the sidelines. Although there are still challenges such as stress testing, the overall landscape is increasingly favorable for those who are ready to hit the road.

If you are thinking of buying a home, now is the time to act. Safe a low mortgage rate he could make a difference, because mortgage rate projections expect a fall in interest rates. Low level lock onone of the best mortgages today which will give you all the confidence you need to move forward with your mortgage strategy. Contact them nesto mortgage experts and take the first step towards home ownership.

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Chez nesto, us mortgage experts commission free and certified in many areas providing exceptional advice and service that exceeds industry standards. Our mortgage experts are salaried, non-certified staff who provide unbiased advice on mortgage options that suit your needs and are rated on customer satisfaction and the quality of their advice. nesto aims to change the mortgage industry by providing honest advice and competitive rates using a fully digital, transparent and contactless process.

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