A few solid rate cuts from the Bank of Canada this year alleviated stress for aspiring homeowners and certain mortgage holders, but residential real estate is about to get even more expensive.
On October 23, the central bank made a jumbo-sized cut, lowering the policy interest rate from 4.25 per cent to 3.75 per cent. Such a low has not been seen since December 2022. Higher interest rates helped bring home prices down for a while, and inversely, new cuts have encouraged a rebound in the housing market
RE/MAX Canada published its Canadian Housing Market Outlook for 2025 on Tuesday.
The real estate organization’s experts forecast a seller’s market next year, with the national average residential price likely to increase by 5 per cent.
Edmonton, Alberta, and Simcoe County, Ontario are in the lead with an estimated 10 per cent price increase. The Truro and Colchester region in Nova Scotia is just behind the two, with an 8 per cent rise expected.
Home sales could also rise by up to 25 per cent in 33 of the 37 areas Remax studied.
Greater Vancouver, B.C. and Simcoe County will be seller’s markets, with 20 per cent and 25 per centbumps in home sales, respectively.
Several other popular Ontario regions will also see significantly heightened sales, with Durham expecting a 15 per cent bump — the second highest in the province — followed by Toronto (12.5 per cent), London (10 per cent), and Kingston (10 per cent).
Here’s how much home prices are expected to rise across Ontario in 2025https://t.co/MJAV61LQjt
— blogTO (@blogTO) November 26, 2024
Homeownership largely “out of reach”
A seller-dominated real estate and housing market is cause for concern if you’re looking to buy a home, but it should not necessarily squash your dreams. Lower interest rates are still a big plus.
According to future price estimates, you’ll still be able to buy a home under $400,000 in several regions, including Thunder Bay, Kenora, and Sault Ste Marie in Ontario; Regina, Saskatchewan; Fredericton and Saint John, New Brunswick; all of Prince Edward Island; and St. Johns, Newfoundland and Labrador.
“While affordability challenges persist, the sequential interest rate cuts and changes to the mortgage stress test are a much-needed reprieve for those looking to get into the market,” said Remax President Christopher Alexander.
As of November 21, the Office of the Superintendent of Financial Institutions (OSFI) no longer requires federally regulated financial institutions to apply the minimum qualifying rate (MQR) when seeking a straight switch for uninsured mortgages.
This announcement came just as the new loan-to-income (LTI) limits on uninsured mortgage portfolios were introduced.
“While both measures are intended to reduce mortgage lending risks, the LTI limits are expected to contain overall residential mortgage credit risk to institutions,” stated the OSFI.
In September, the Department of Finance announced it would expand eligibility for 30-year mortgage amortizations to all first-time homebuyers and Canadians who purchase new builds. Starting December 15, 2024, first-time homebuyers and those buying new builds will be eligible for the 30-year mortgage loan.
1. Expanding eligibility for 30-year insured mortgages to all first-time homebuyers and to all buyers of new builds. This will incentivize more new housing construction and lower monthly mortgage payments for Canadians.
— Chrystia Freeland (@cafreeland) September 16, 2024
The RE/MAX report highlighted that half of Canadians feel more optimistic about the housing market than last year. However, with 60 per cent of Canadians owning their home, this is hardly surprising. Twenty-eight percent of Canadians rent, and 8 per cent don’t own or rent.
According to a recent Leger survey, 88 per cent of renters say “the goal of owning a home in Canada has become out of reach.” The same survey reports that 84 per cent of Canadians say buying a home “feels like a luxury.”
Per RE/MAX, 43 per cent of Canadians feel homeownership remains out of reach, and 20 per cent say they can “no longer afford to own a home.”
