Homes in Canada Become More Affordable, and Housing Starts Re-Start

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.

Lower Rates Not Moving Markets, Yet

The Bank of Canada is yanking on the pull cord, but the housing market engine just won’t start. Despite back-to-back rate cuts month-over-month, national home sales dropped 0.7% in July, according to the CREA, with the biggest declines in Toronto and Calgary. At the same time, new listings increased by another 0.9%, leading CREA to suggest “the stage is increasingly being set for a return of a more active housing market.” With inventory up and widespread expectations of further rate cuts in September, Canada’s housing market motor could be running at full speed pretty soon.

A Light at the End of the Interest Rate Tunnel 

After a multi-year battle with soaring prices, it appears the nation’s common economic enemy has been vanquished, or at least severely weakened. This week Statistics Canada announced that prices rose just 2.5% annualized in July, marking the slowest pace of inflation recorded since March of 2021, when interest rates started rising. In fact, the agency hasn’t reported an inflation rate that started with a 3 or higher in all of 2024, meaning inflation has remained firmly within the Bank of Canada’s target range of 1% to 3%, paving the way for another interest rate cut in early September. 

Housing Starts Start Starting  

The construction industry has been in a state of arrested development in 2024, but as conditions look ripe for a demand surge, boots are getting laced back up and the shovels are getting put back in the ground. When interest rates climbed, Canada’s goal of building more homes moved in the wrong direction, with sales at a standstill and developers losing billions to projects they couldn’t afford to finish. That’s why this week’s report from CMHC caught everyone by surprise when it revealed a 16% increase in housing starts in July compared to June, driven by multi-unit construction in cities.

Buying a Home in Canada is Getting More Affordable. No, Really.

Here’s something we don’t get to say often: housing is getting more affordable in Canada. Two separate reports found affordability improved in July thanks to lower interest rates and relatively flat housing prices. According to the National Bank of Canada, eight of Canada’s 10 largest markets saw mortgage costs down in the second quarter of the year, averaging a 1.1% improvement compared to average incomes. New Ratehub.ca data also found that the income required to pass the stress test declined last month in all 13 markets it analyzes, and by more than $5,000 in Toronto and Vancouver.

With First-Timers Sidelined, Experienced Buyers Own the Market   

Like the early bird special at the local diner, the only folks shuffling around the housing market these days are those with a bit more experience. With first-time homebuyers priced out of the country’s most expensive markets, a report by RE/MAX Canada finds the primary buyers are those who already own property. According to the study, which analyzed detached home-buying activity in the Greater Toronto Area, Greater Vancouver Area, and Fraser Valley in the first six months of 2024, most of the buying has been driven by existing owners and investors in those city’s most desirable neighbourhoods, as first-timers wait on the sidelines.

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