In recent months, the Canadian real estate market has seen promising signs of improved affordability, thanks to the Bank of Canada’s easing monetary policy and declining mortgage rates. After a prolonged period of rising costs and challenges for homebuyers, July 2024 marked a turning point, with mortgage rates softening and home prices stabilizing in many regions.A report by Ratehub.ca highlighted a nationwide improvement in housing affordability, with the minimum income required to purchase an average-priced home dropping across 13 major markets. This marks the first improvement in affordability since January 2024. The drop was driven by the Bank of Canada’s rate cuts in June and July, bringing the central bank’s interest rate down from 5% to 4.5%. In tandem, five-year Government of Canada bond yields fell, which influenced fixed-rate mortgages to trend lower.&nbsp;<figure class="image image_resized image-style-align-center" style="width:73.28%;"><img src="https://files.rifo.co/CompanySite/146/146_image.png"></figure>&nbsp;In Toronto, the income needed to afford an average home dropped by $5,410, driven by both lower mortgage rates and a $13,300 decrease in home prices. Similarly, Vancouver saw a decline in required income by $5,020, while other regions like Hamilton, Ont., and Atlantic Canada experienced milder, yet noticeable, improvements in affordability.While affordability has improved, the market faces other challenges. A growing number of condo completions in the Greater Toronto Area (GTA) has led to an oversupply. Active condo listings across the GTA were up 63.9% year-over-year in July 2024, a figure echoed in other major Canadian cities like London, Hamilton-Burlington, and Vancouver. TD economist Rishi Sondhi pointed out that GTA condo resales in July were down 25% compared to pre-pandemic levels, due to a combination of high interest rates and increased condo inventory. Many investors are also offloading their properties, driven by negative cash flows and declining rents.However, experts remain optimistic about the long-term prospects. “Today’s elevated listing inventory will ultimately recede,” said Toronto Regional Real Estate Board (TRREB) Chief Market Analyst Jason Mercer. The combination of declining mortgage rates, a slowdown in condo completions, and increased demand, especially from first-time buyers, is expected to gradually restore balance to the market. Mercer further emphasized the need to increase housing construction, particularly affordable options, to ensure the long-term health of the GTA housing market.The outlook for the condo market is also encouraging. Although prices fell by 2% year-over-year in July and are predicted to decline by mid-to-high single digits in early 2025, Sondhi foresees a gradual recovery as supply and demand align. The Bank of Canada’s recent rate cut to 4.25% and the likelihood of further cuts are expected to improve affordability and boost buyer activity. Analysts believe that the market is nearing rock bottom, and now is an opportune time for buyers to lock in a purchase before demand starts picking up again.Looking ahead, the Canadian real estate market appears poised for a strong rebound. Experts predict that as interest rates continue to drop over the next few months, the housing market will begin to heat up, particularly by spring of 2025, and could strengthen with each year going forward. With precon market trending down, condo completions are expected to slow, easing the current oversupply, and first-time buyers will benefit from reduced borrowing costs. This period of adjustment presents a unique opportunity for prospective homebuyers and investors alike. It won’t be quick, but the sellers and the buyers can anticipate a frenzy of market activity over a longer term period.As the market stabilizes, the real estate landscape of the future is shaping up to be one of opportunity for those ready to make their move.The big question for buyers and investors is: how will you capitalize on this evolving market before the surge in market activity begins?

Experts Forecast a Brighter Horizon for Canada's Real Estate Market

Canada's real estate market is seeing improved affordability, rising condo completions, and an optimistic future in the latest trends and outlook with RIFO

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