The Canadian real estate market is going through an adjustment period right now. After a couple of years of meteoric growth across the entire housing sector, conditions seem to be settling, the frenzy has come to an end, and Canadian housing markets from coast to coast are regaining equilibrium.
According to the 2024 RE/MAX Canadian Housing Market Outlook, the national average residential price is expected to rise only slightly this year, by 0.5 per cent. Meanwhile, 61 per cent of markets surveyed in the report are expected to see unit sales increase year over year. This is a complete retreat from the challenging market conditions experienced in early 2022.
So, what is happening exactly? First, the Bank of Canada (BoC) has been raising interest rates, a tightening cycle that has lifted mortgage rates. Second, there has been a great deal of uncertainty in the housing market and the broader economy. Third, many households have exhausted their pandemic-era savings, and inflation has diminished their purchasing power.
Ultimately, the Canadian real estate market is slipping into balanced territory because of the latest developments nationwide. RE/MAX’s outlook for the Canadian housing market suggests 41 per cent of regions will return to balance, while 28 per cent of markets will likely favour sellers, 21 per cent tilted toward buyers, and four per cent experiencing mixed conditions.
“It’s been a challenging year for Canadian homebuyers and sellers, who have been feeling the effects of a severe housing shortage and the high cost of living, but much like Canada’s housing market, Canadians have stayed resilient. Historically, real estate has given owners excellent returns and strong financial security – and that hasn’t changed,” said Christopher Alexander, President of RE/MAX Canada. “The slower market we experienced across the country in the fall could be an early indicator of an active 2024, as reflected in the modest price increase and sales outlook in 2024, and the balancing of conditions in several regions across the country.”
But while this talk of balancing conditions and steadying prices is good news for prospective homebuyers, what about sellers? Is this type of environment beneficial for those looking to list their home this year?
Why Current Conditions in the Canadian Real Estate Market Could be Good News for Sellers
A balanced market is when the supply of residential properties meets the level of demand. A buyer’s market is when there is a greater inventory of homes than the number of buyers.
Now, it is crucial to understand how these types of climates work:
Buyers will possess more leverage and may be able to negotiate prices. (Much different from years past!)
Your home may sit unsold on the market for longer than you anticipated.
You might need to lower your expectations from your initial asking price.
With prices expected to ease in 2024 and conditions tilting in favour of buyers, where is the good news for sellers?
First, the +0.5-per-cent outlook is a national average, and may be higher or lower depending on where you are located. For example, if you are selling your home in the Edmonton real estate market, the sale price is expected to rise four per cent in 2024. Meanwhile, if you are listing your home for sale in the Windsor housing market, average price is expected to rise seven per cent this year.
Second, if you are selling your home, you will also need another place to hang your hat once the transaction is completed. Therefore, if you take the equity and purchase another residence, you will not have to endure the frenzy and panic of a seller’s market.
Finally, a balanced market does not mean you will need to give away your home for a 20-per-cent discount. But you might need to employ a few additional measures to attract buyers.
Here are several suggestions:
Always work with a real estate agent.
Be sure that your home is in tip-top shape and have your home inspected before a For Sale sign is erected on your front lawn.
Make your front and backyard presentable; enhance your home’s curb appeal.
Ensure that you clean your house of clutter.
Add a couple of incentives, such as new appliances.
Remember, there is still demand for housing. With the Bank of Canada expected to start decreasing interest rates this year, home buying is likely to pick up again, especially as immigration levels rise. Put simply, the competition in the Canadian real estate market will likely be revived.
“Canadians have been understandably hesitant to engage in the market in 2023. Despite this, Canadians still see real estate as a solid long-term investment,” said Alexander.