While the start of 2024 has seen a soft real estate market, the BC Real Estate Association (BCREA) believes home sales will pick up by the end of the year.
In its latest economic outlook, released Thursday morning, the BCREA says all eyes are on the Bank of Canada’s interest rates, and when the country will begin to see those drop.
“It appears that buyer confidence is hinging on seeing the Bank of Canada lower its policy rate returning to the market. BC home sales are tracking at a 65,000 unit annual rate through the first quarter of this year, essentially the same languid pace as the first quarter of last year,” the BCREA said.
“This is even though Canadian five-year fixed mortgage rates have already plummeted to start the year, falling from over 6 per cent in late 2023 to 5.09 per cent in the first quarter,” the association added.
“Therefore, the biggest question for the provincial housing market is when the Bank of Canada will lower its policy rate and by how much. The answer to that question depends on how the Canadian economy and, crucially, Canadian inflation will evolve in the coming months.”
The BCREA says the Lower Mainland tends to be “the engine room” of the province’s economy, balancing out the rest of B.C.’s “underperformance.”
It notes that deteriorating affordability in Greater Vancouver will remain a significant concern, however, it does expect sales to pick up later this year.
“A combination of falling fixed mortgage rates and strong population growth is forecast to drive sales higher this year and next. After a very slow 2023, we forecast sales in Greater Vancouver will rise 7.3 per cent this year, while the Fraser Valley will see sales rise 7.4 per cent, and Chilliwack sales are expected to increase 8.1 per cent.”
The BCREA says it expects price growth in the region to “mute” as listings are expected to normalize this year after a 20-year low in 2023.
All markets in the Lower Mainland should see a one to two per cent increase, the BCREA says.
“However, the full impact of falling interest rates and a recovering economy is expected to buoy prices in the more affordable areas of the Lower Mainland in 2025, with prices rising 4 per cent or more in Chilliwack and the Fraser Valley.”
The BCREA says it believes the BoC will begin to lower interest rates in June, as the economy signals “weak economic growth, a slowing labour market, and a downward trend in inflation.”
“We continue to forecast that the Bank will cut its policy rate starting in June, with as much as 100 basis points of cuts by the end of 2024. As a result, we expect home sales to pick up in the second half of the year ultimately rising 6.9 per cent over last year and heading into 2025 with strong momentum.”
TORONTO – One expert predicts Ottawa‘s changes to mortgage rules will help spur demand among potential homebuyers but says policies aimed at driving new supply are needed to address the “core issues” facing the market.
The federal government’s changes, set to come into force mid-December, include a higher price cap for insured mortgages to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
CIBC Capital Markets deputy chief economist Benjamin Tal calls it a “significant” move likely to accelerate the recovery of the housing market, a process already underway as interest rates have begun to fall.
However, he says in a note that policymakers should aim to “prevent that from becoming too much of a good thing” through policies geared toward the supply side.
Tal says the main issue is the lack of supply available to respond to Canada’s rapidly increasing population, particularly in major cities.
This report by The Canadian Press was first published Sept. 17,2024.
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
