As the long-awaited decline in interest rates begins to take shape, early insights from Re/Max brokers and agents nationwide suggest the fall’s housing market activity will be steady. According to Re/Max’s 2024 Fall Housing Market Outlook, average sale prices for all housing types are expected to increase between one and six per cent in most regions by the end of the year.
With the next Bank of Canada (BoC) interest rate announcement scheduled for September 4, many Canadians are watching closely. A recent Re/Max survey reveals that 16 per cent of Canadians would feel more comfortable entering the real estate market if the BoC implements a rate cut of more than 100 basis points by the end of the year.
“The fall market is usually a good early indicator for activity as we look ahead to early 2025, and we’re headed toward more healthy territory. With interest rates starting to ease, buyers are beginning to come off the sidelines,” says Christopher Alexander, president, Re/Max Canada.
However, Alexander notes that while the market is showing signs of life, it won’t necessarily return to historical activity levels without a more substantial move from the Bank of Canada.
Consumer confidence on the rise with remaining challenges
As anticipation builds around further potential interest rate cuts, first-time homebuyer confidence is notably increasing. The survey found that 25 per cent of Canadians are actively saving for a home and believe they will soon be able to purchase, with the most optimism seen among younger Millennials and Gen Zs aged 18-24 (35 per cent).
On the other hand, some current homeowners may find that the rate cuts come too late. 14 per cent of homeowners facing mortgage renewal at higher rates are considering selling their homes due to affordability challenges.
Financial priorities for many Canadians remain focused on day-to-day expenses, such as utilities and food (58 per cent), and travel (45 per cent), with home purchases ranking among the top three priorities for 25 per cent of respondents. Meanwhile, affordability concerns are prompting 28 per cent of Canadians to consider relocating to another country, and 25 per cent are reconsidering starting a family.
Affordability and supply remain key concerns
“Despite some consumer confidence starting to return to the market this season, the reality is Canadians are still grappling with some serious housing affordability challenges rooted in lack of supply. Yes, borrowing is becoming less expensive, but this won’t make housing affordable in the long run,” says Alexander.
As more buyers re-enter the market and available inventory is absorbed, Alexander warns of potential upward pressure on prices. He stresses the need for a comprehensive national housing strategy developed collaboratively by all levels of government to address supply shortages strategically.
“In the meantime, buyers would be wise to work with an experienced real estate agent to help navigate those cyclical market ups and downs that often accompany this push and pull of supply and demand.”
Review the full report, including regional insights.
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