The pace of home sales in Ontario in 2023 hit lows not seen the turn of the century, and with little evidence that mortgage rates will drop significantly any time soon, forecasts are predicting the sluggishness to continue into early 2024.
While prices have dropped somewhat from their pandemic-driven highs, the combination of high-interest rates and buyers waiting for prices to tumble further has created a slow sales market throughout much of the province, according to a range of industry information.
The number of home sales in the Greater Toronto Area in 2023 is on track to be lower than in any year since 2001, when the region’s population was roughly 25 per cent smaller than it is today.
The latest figures available show the number of homes sold across Ontario last year to be down nearly 13 per cent from the previous year, described by the Canadian Real Estate Association as a substantial decline.
CBC News interviewed three experts on the real estate market to find out what they expect to happen in 2024.
While home prices in Ontario have dropped somewhat from their pandemic-driven highs, a combination of high interest rates and buyers waiting for prices to tumble further has created a slow sales market throughout much of the province. (Michael Wilson/CBC)
Expect ‘continued stagnation’ in sales
There’s general consensus among those experts that sales volumes will remain sluggish in the first part of 2024, until or unless mortgage rates come down significantly, or sellers start accepting lower bids.
“The general trend we’re probably going to see is one of continued stagnation,” said Ron Butler, a broker with Butler Mortgage.
He doubts that mortgage rates will drop quickly enough or low enough to jolt reluctant buyers off the sidelines in the early part of 2024.
John Pasalis, president of Realosophy Realty Inc., adds that sellers have yet to bring down their asking prices deeply enough to offset the increased borrowing costs that buyers face.
“It’s the combination of these high prices and high interest rates that is keeping a lot of buyers out of the market right now,” Pasalis said.
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TD economist Rishi Sondhi predicts sales volumes to remain relatively low in the coming year, although better than what the numbers were in 2023.
“We think that the bottom has probably been reached,” Sondhi said. “Sales levels were just so darn low in Ontario [in 2023]. It’s hard to go lower from there.”
Real estate firm Royal LePage is forecasting a six per cent rise in the average home price in the Greater Toronto Area in 2024, while real estate firm ReMax is forecasting an average three per cent drop. (Patrick Morrell/CBC)
Where will prices head?
There’s not a lot of consensus on what will happen with prices, in part because of supply and demand factors that are expected to have conflicting effects.
For instance, while decade-high mortgage rates are suppressing demand, rapid population growth is pushing it upward and new construction isn’t keeping pace.
Real estate firm Royal LePage is forecasting a six per cent rise in the average home price in the Greater Toronto Area by the end of 2024, and a 4.5 per cent rise in Ottawa.
By contrast, real estate firm ReMax is forecasting an average three per cent drop in prices in the GTA for 2024 and a two per cent increase in Ottawa.
Butler says “buyer sentiment” will have a significant impact on prices in 2024.
“If you feel that these prices are really too high and that they will come down, no matter how motivated you are to buy a home, you will have a tendency to wait and see,” he said. “It’ll turn around eventually, but right now I think that buyer sentiment is entrenched.”
TD economists are predicting the number of new home construction starts will fall in 2024, following reduced sales in the pre-construction market. (CBC)
New home construction forecast to slow
Premier Doug Ford’s government is now entering the third year of its 10-year timeframe for the promised construction of 1.5 million new homes in Ontario, and has yet to achieve the annual pace needed to achieve that target.
Final figures for 2023 aren’t in yet but, as of November, the pace of new construction was slower than the 96,000 housing starts in the previous year.
Forecasts are now predicting the pace will slow even further this year. That’s because developers are struggling to finance projects because of high interest rates, inflation has pushed up the price of building materials and a labour crunch continues to hamper the construction industry.
“We’re expecting housing starts to fall in 2024,” said Sondhi. The evidence is based on a drop in sales in the pre-construction market over the past two years after mortgage rates began to climb.
Sondhi is not forecasting a collapse in new home construction, partly because of expected growth in purpose-built rental housing, fuelled by the provincial and federal governments exempting those projects from HST.
Meanwhile, figures show that around 30 of Ontario’s largest municipalities will fail to qualify for a share of the government’s $1.2 billion Building Faster Fund in 2024 because their housing start numbers in 2023 fell short of the mark.
Sales of new condos in the GTA fell 47 per cent in a year, according to a November 2023 report from research firm Urbanation. (John Rieti/CBC)
Uncertainty for the condo sector
Condominiums are the segment of Ontario’s housing market that looks to be in the roughest shape in 2024, in part because a large proportion are owned by investors.
“As their mortgages come up for renewal, it’s going to be harder to afford those condos,” said Pasalis.
“Over the next 12 to 18 months, we’ll probably see more investors unloading properties just because they can’t afford to have so much debt at today’s interest rates,” he said.
Butler adds he expects to see many investors trying to sell off small condos in urban centres because their plans to turn them into short-term rentals fell through.
As of the end of November, the Toronto Region Real Estate Board had reported 23,128 condo sales in 2023 — a 44 per cent decline from the same period in 2021.
Sales of new condos in the GTA appear to have fallen even more sharply, dropping by 47 per cent in a year, according to a November report from research firm Urbanation.
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.
MONTREAL – The Quebec Professional Association of Real Estate Brokers says Montreal-area home sales rose 9.3 per cent in August compared with the same month last year, with levels slightly higher than the historical average for this time of year.
The association says home sales in the region totalled 2,991 for the month, up from 2,737 in August 2023.
The median price for all housing types was up year-over-year, led by a six per cent increase for the price of a plex at $763,000 last month.
The median price for a single-family home rose 5.2 per cent to $590,000 and the median price for a condominium rose 4.4 per cent to $407,100.
QPAREB market analysis director Charles Brant says the strength of the Montreal resale market contrasts with declines in many other Canadian cities struggling with higher levels of household debt, lower savings and diminishing purchasing power.
Active listings for August jumped 18 per cent compared with a year earlier to 17,200, while new listings rose 1.7 per cent to 4,840.
This report by The Canadian Press was first published Sept. 6, 2024.
