Where the Housing Market Could be Heading, and Which Canadian Cities Have the Steepest Rents

This week’s top real estate stories.

By  Jared Lindzon | 2 minute read

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

Has the Market Already Turned Around? 

After a prolonged period of constipation something is brewing in the bowels of the country’s housing market. Last month home sales jumped 8.7% over November and 3.7% ahead of December 2022, according to the Canadian Real Estate Association. The sudden jolt comes after a lengthy period of sluggish sales volumes that finished the year more than 11% below 2022 levels. That made last year the slowest sales year the real estate sector has seen since 2008’s financial crisis. Now that things have started flowing again, CREA expects sales volumes will be more regular this year, projecting a 10.4% increase. 

There’s Nowhere Left to Hide from Steep Rent in Canada

Renters in Canada’s most expensive cities continue to see prices flatten, while more affordable accommodations are quickly becoming less so. According to Rentals.ca’s latest report, the nation’s average rent hit a record-high of $2,178 in December, representing an 8.6% jump on the year, and 22% since 2022. Rent hikes were steepest in traditionally affordable markets like Brampton, Edmonton, Regina, Quebec City, and Calgary, and among more affordable rental types, like studios, one-bedroom apartments, and purpose-built rentals. Toronto, meanwhile, saw its third straight month of rent declines, averaging just 2.1% higher than last year, while Vancouver saw a decline of 0.7%.

What to Expect When You’re Expecting a Price Hike

The prospect of falling interest rates and what is suspected to be significant pent-up demand has experts boldly predicting we’ll see another jump in home prices in 2024, maybe, it depends. According to Royal LePage’s 2024 Market Survey Forecast home prices will increase 5.5% in the coming year, with detached homes climbing 6% and condos going up 5%. That projection is based on the assumption that interest rates will hold steady in the first half of 2024 before some modest cuts. The report projects a jump of 8% in Calgary, 6% in Toronto, 5% in Montreal and 3% in Vancouver.

The Fight Over Inflation Wages On  

When it comes to tackling inflation, Canada continues to move two steps forward, and one step back. After a couple of months of positive inflation data, December was another step in the wrong direction, with inflation rising to 3.4%, up from November’s reading of 3.1%. That’s still a significant improvement from the 40-year high of 6.8% seen in 2022, but still a long way from the Bank of Canada’s stated target of 1 to 3%. The increase is largely thanks to a relatively strong December 2022 making last December look worse on paper in what is known as the “base year effect.”

Housing Starts and Stops

If the best way to solve a housing crisis is by building more homes, Canada may be in crisis mode for a long time. That’s because, despite an 18% jump in new housing projects in December, housing starts in urban centres were down 7% in 2023, according to CMHC, and dropped 25% in the single-detached category. According to TD Economist Rishi Sondhi, the outlook for 2024 isn’t great, either. With interest rates still high and the market still relatively cool he says there’s not much incentive to put shovels in the ground, and it could take months before conditions change. 

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