Summer Housing Trends in Ontario: What to Expect
Summer season is upon us and with hopes of a hustling summer real estate market. High borrowing costs and uncertainties surrounding the Bank of Canada's policies have kept some potential buyers on the sidelines this past Spring, however they are out in full force now. While the average home prices have risen slightly this spring, this increase is primarily due to more expensive homes being sold, rather than a general rise in prices.
Looking ahead to the second half of 2024, the resale market in Ontario is expected to pick up. It will be a steady rise, this adjustment is due to expectations that borrowing costs won’t decrease as much as initially thought, with the Bank of Canada likely to make fewer interest rate cuts than anticipated. Additionally, the U.S. Federal Reserve’s potential delay in cutting its policy rate until late 2024 has also tempered expectations for Canadian bond yield declines this year.
On the horizon, 2025 is poised to see stronger growth in Canadian home sales and average prices. Any lack of activity in 2024 is expected to create pent-up demand, which, coupled with expected rate relief, should boost the market.
In Ontario, average home prices are set to benefit from significant sales gains as pent-up demand drives a recovery. However, in the near term, price growth will be modest due to a balance between supply and demand. This could be partially offset by compositional factors, as has been observed in recent months. Long-term, the region's affordability issues will likely limit the pace of price increases.
Several risks could impact this forecast. If yields fall more than anticipated, price growth might surprise on the upside, as markets have shown sensitivity to favorable rate changes. Conversely, federal policies could slow population growth, affecting rental demand and investor interest, which constitutes a significant portion of the market. An increase in listings, especially in Ontario’s condo market, could also exert downward pressure on prices more than expected.
Finally, while the federal government’s new housing plan focuses on supporting new home construction, its impact on the resale market in the near term is expected to be limited due to the targeted nature of the proposed measures.
Key Takeaways:
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Late 2024: Gradual market recovery expected, albeit at a moderated pace.
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2025 Outlook: Stronger growth anticipated due to pent-up demand and rate relief.
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Ontario Focus: Price growth driven by pent-up demand but tempered by affordability and supply-demand dynamics.
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Risks: Population growth policies and market reaction to rate changes could influence trends significantly.
Stay tuned for more updates as the market evolves.
If you have any questions on how these factors can benefit you in your home selling or buying, contact us for a chat today! 905.335.4102 | info@roccasisters.ca