The real estate market is coming back to life and this could continue in 2025

After five reductions in the key rate, the country’s real estate market is regaining strength. Since the start of fall, home sales have jumped nearly 10%, according to figures from the Canadian Real Estate Association (CREA).

October and November marked the start of the long-awaited recovery in residential salesnotes in a recent press release the president of theACIJames Mabey. With more than 44,000 properties changing hands last month, real estate activity is back to pre-pandemic levels.

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With this renewed interest from buyers, prices have also started to rise again. In November, the average price of properties sold in the country stood at $694,411, an increase of 7.4% compared to the same month last year.

The property price index used by theACI increased by 0.6% last month, but it remains down 1.2% in the last 12 months.

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Several observers, however, expected the recovery to occur earlier in the year. A year ago, we thought that it was to be a little more instantaneous, around spring or summer, that the resale activity in the country was set to resume.says Robert Hogue, deputy chief economist at RBC.

It took a little while. It happened more in the fall.

It appears that buyers waited for declines [de taux d’intérêt] are still quite important before making the leap into the markethe adds.

Since the beginning of June, the Bank of Canada has made five consecutive reductions in its key rate, dropping it from 5% to 3.25%.

For the holder of a variable rate mortgage worth $500,000 amortized over 25 years, recent decisions by the central bank have reduced their monthly payments by approximately $500.

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Most observers expect interest rates to continue falling next year, although monetary policy easing is likely to be more gradual in 2025.

Recent changes to federal mortgage rules should also help the rebound in housing activity continue in the coming months, experts say.

Coming out of the sidelines

For Élodie Brunel, it was above all the increase in the ceiling for insured mortgage loans that convinced her to relaunch her efforts to buy a property.

Since December 15, it is possible to make a down payment of less than 20% and take out mortgage insurance when purchasing a property worth up to $1.5 million. Previously, the ceiling for this type of insurance was set at $1 million. It had not been increased since 2012.

We want to buy in Toronto. We don’t want to go far to the suburbs. […] We want to stay around the city center and houses under $1 million don’t existsays Ms. Brunel.

With this rule change, she and her husband will be able to reduce their down payment by tens of thousands of dollars.

Furthermore, those purchasing their first residence or a newly constructed principal residence can now opt for a 30-year amortization period. This option allows them to reduce their monthly payment, but ultimately increases what they have to pay in interest.

Each of these measures will not necessarily trigger much greater activity [dans le marché immobilier]but I think that it is rather the accumulation of all the measures, including the reduction in interest rates, which will activate demandbelieves Mr. Hogue.

A market competitive in 2025

According to real estate broker Valérie Paquin, recently elected president of theACIbuyers will certainly be there in 2025. The big question that remains is how many properties will be available on the market?

If the number remains low because some people are not ready to put [leur propriété] for sale, this will become a market that will be very competitivecontinues Ms. Paquin.

At the end of November, just over 160,000 properties were listed on sales systems operated by boards and real estate associations across the country, up almost 9% from last year. This offer, however, remained below the historical average for this time of the year, which is around 178,000 registrations, indicates theACI.

Robert Hogue of RBC expects the recovery in sales to continue, although without any overheating as was the case at the height of the pandemic.

On the price side, we expect the increases to still be gradual: perhaps somewhere between 1% and 5% overall. [du pays] and a little more in some markets like Alberta and maybe even Quebecmaintains the economist.

However, the poor The affordability of properties in certain regions will, according to him, force certain potential buyers to remain in the rental market.

The economist also predicts that several borrowers will experience a shock very hard when renewing their mortgage, especially those who purchased their property at the start of the pandemic, when prices were at their ceiling and interest rates were at their lowest.

It could even push some [propriétaires] having to make decisions they wouldn’t want to make. But overall, we expect this shock to still be manageablehe said.

For her part, Élodie Brunel hopes to submit a purchase offer as soon as possible. We say to ourselves that in January, after the holidays, the market will pick up and it risks soaring againshe said.

A sudden rise in prices would force her to abandon her plans to buy a house for the moment, as she rents a three-bedroom residence where her family of five lives.

We’re a little tight, she admits. I don’t think that by buying we will have more space, but at least it will be at home.

With information from Philippe de Montigny