2024 Expected to be a Better Year for Canada’s Housing Market, and Experts Predict Variable Rates will Start to Fall

This week’s top real estate stories.

By  Jared Lindzon | 2 minute read

Jan 5

Wahi's Week in Real Estate

Every Friday, Wahi brings you the most important real estate stories from the past week.

Canadians Need Double the Average Income to Afford the Average Home  

Canadians don’t need a detailed economic report to know housing affordability is at an all-time low, but RBC provided one anyway. Just before the holidays, economist Robert Hogue broke down the bank’s aggregate affordability measure, which jumped by 2.8% in the third quarter to 62.5%. That means average Canadians need to spend that much of their income to afford the average home, nearly double CMHC’s recommended budget. While some cities are faring better than others the situation is especially dire in Toronto and Vancouver, where it takes 84% and a whopping 102.6% of average household income to afford homeownership, respectively.

“In the final days of 2023, five-year fixed rates dipped below 5% for the first time since May, and experts predict variable rates will soon follow.”

2024 Will Clear Low Bar Set by 2023 Housing Market 

Experts are confident that 2024 will be a better year for Canada’s housing market, but given how bad last year went, that really isn’t saying much. Still, market watchers say there are reasons for both buyers and sellers to be optimistic. Most expect borrowing costs to drop by at least one full percentage point this year, the Feds have hinted at some more housing relief funding, while pent-up demand could spark a flurry of activity. CREA and RBC both expect sales to jump by at least 9% from last year, while TD forecasts a more modest 5.2% increase.

New Year, New Short-Term Rental Laws

A new year typically brings a slew of rules changes, and this year there’s one major legislative change affecting short-term rental owners that took effect on January 1. Near the end of last year, the Federal Government announced that starting in 2024, landlords could no longer write off expenses related to said rentals. The Feds are also spending $50 million over the next three years to help municipalities crack down on the practice. In response, AirBnB and VRBO argued that their services aren’t a primary driver of Canada’s housing crisis, and instead help prop up the country’s tourism sector.       

The Feds Kick Off Crackdown on Exclusive Listings 

The other major real estate related legislative change that kicked into gear this year targets “off-market” sales. As of this week, realtors are required to post “exclusive” listings on the Multiple Listings Service (MLS) within three days of any public marketing, which could include anything from a “for sale” sign to a social media post about a property, in what CREA dubbed the “Duty of Cooperation.” Previously, such listings were exempt from the public record, and suffice to say those affected aren’t thrilled with the more cumbersome process, which CREA argues is “in the best interest of Canadian homebuyers and sellers.”

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Mortgage Rates Falling Thanks to Optimistic Outlook  

Sometimes anticipation can be just as satisfying as the real thing. And that’s true among Canada’s mortgage rate providers, who have been slashing mortgage rates on the prospect of an interest rate reduction in the year ahead. To be clear, the Bank of Canada has not dropped its key interest rates just yet, but with most experts anticipating a decline coming as soon as April, mortgage rates are already starting to fall. In the final days of 2023, five-year fixed rates dipped below 5% for the first time since May, and experts predict variable rates will soon follow.

Jared Lindzon

Wahi Writer

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