The Quebec Professional Association of Real Estate Brokers (QPAREB) recently released its quarterly real estate market statistics, revealing that 20,620 residential sales were recorded across the province in the third quarter of 2024 — marking a 13 per cent increase from the same period in 2023. This level of activity significantly outpaces historical averages for this time of year.

“The Quebec resale real estate market was robust in the third quarter, with transactional activity returning to levels well above the historical average for this time of year in most metropolitan areas and agglomerations. With the key interest rate dropping 75 basis points since the beginning of the summer, there was a sharp rise in the consumer confidence index in regard to major purchases, such as property.

It is also worth noting that the decline in fixed mortgage rates, which have already reached attractive levels, has occurred more quickly than that of variable rates,” notes Charles Brant, QPAREB market analysis director.

Brant also points out that the rapid financing cost decline has helped to curb the growing number of forced sales or repossessions in a market where job losses are increasing.

Sales trends: High-end market rebounds, many repeat buyers & lower entry-level transactions

Brant continues to note that the largest price increases in the single-family home segment involve transactions over $500,000 (29 per cent). Condominiums are in a similar situation. “This price segment is above the provincial median price ($448,550) and accounts for 40 per cent of transactions in this property category. “On one hand, the market continues to be driven by repeat buyers, and on the other, the high-end market, above $1 million, is experiencing a rebound,” Brant points out.

Sales of entry-level product ($300,000 and below) totalled 23 per cent of total transactions and have decreased by 6.0 per cent due to a lack of sufficient listings. “The mid-range price segment, which is seeing slightly above-average growth and despite the drop in interest rates, only allows the more affluent (or strategic) first-time homebuyers to access homeownership in competition with repeat buyers from Quebec or elsewhere,” concludes Brant.

Quarterly highlights for the province

Condominiums saw the highest sales growth in the province, with a 16 per cent increase in transactions. Single-family homes followed with a 13 per cent rise while plexes saw a 9.0 per cent increase.

Sherbrooke led among Census Metropolitan Areas (CMAs) with a 26 per cent rise in sales. Other CMAs such as Montreal, Quebec City and Gatineau saw increases of 12-13 per cent, while Trois-Rivières and Drummondville posted more modest growth.

Rouyn-Noranda and Lachute saw remarkable growth, with sales surging by 53 per cent and 47 per cent, respectively. Other cities like Shawinigan, Thetford Mines and Saint-Georges also posted gains ranging from 37-41 per cent.

Inventory, pricing, market conditions

Active listings increased by 17 per cent in the third quarter of 2024 compared to the same period last year, reaching 36,824 units. However, this remains well below the historical average of 46,645 listings.

The median price for single-family homes rose by 7.0 per cent to $448,550, while condominium prices increased by 4.0 per cent to $379,250. Small-income properties saw a 10 per cent jump in their median price, reaching $583,000. The upward pressure on median prices was driven by growth in sales of properties priced above $500,000.

On average, single-family homes took 60 days to sell in the third quarter of 2024, an increase of eight days compared to the previous year. Condominiums and small-income properties took slightly longer, with selling times of 61 days and 79 days, respectively (an increase for each of five days compared to last year).

Review the full Q3 2024 report, including by CMA.

Following the Bank of Canada’s third consecutive cut to the overnight lending rate this year, reducing it by another 25 basis points in September to 4.25 per cent, Canada’s housing market should see an increase in activity this fall and continue into next year.

For consumers, the drop is a positive sign that we’ve moved past the peak of high lending rates, and with further rate cuts expected, many sidelined buyers will feel confident enough to re-enter the market amid more favourable borrowing conditions. But is it enough to make a material difference in the budgets of first-time buyers?

Several hurdles besides borrowing costs: Saving for down payment, passing stress test & finding the right property

High interest rates are just one of several financial hurdles that first-time buyers have to overcome. In addition to the high cost of borrowing, saving for a down payment — which is difficult to do when rental rates are high — plus passing the stress test to qualify for a mortgage and finding an appropriately-sized property in a desirable region within their price range pose a significant challenge. More supply — most importantly, the right type of supply — is needed to help young families achieve their goal of homeownership.  

While there are government initiatives targeted at helping people save and making lending practices more favourable for the next generation of buyers, such as allowing Canadian lenders to offer 30-year amortizations for insured mortgages of new construction homes, more needs to be done to incentivize development and make the construction of new homes easier, faster and more affordable for builders.

This is especially true in the country’s most expensive and densely-populated markets, where high construction and borrowing costs remain a major barrier for developers. Without further intervention from the government, new construction will continue to decline in the coming years. 

Increase in inventory required to make homeownership attainable

While home prices have remained stable in most markets this year and declining interest rates are making owning a home a bit more accessible to some buyers who have been waiting in the wings, we cannot afford to take the spotlight off the bigger issue: there are still too few homes for our growing population.

We’re approaching the intersection of declining interest rates and home price appreciation. If activity picks up in the months ahead, we’ll reach a point where the increased affordability offered by lower borrowing costs is outweighed by price gains due to increased competition.

According to a 2023 report by the Canada Mortgage and Housing Corporation (CMHC), Canada needs to build approximately 3.5 million additional housing units by 2030 in order to restore affordability. However, experts have refuted this figure, citing that with continued population growth, hundreds of thousands more homes will be required.

For first-time buyers, a difficult choice looms: whether to transact now or hold off until further rate reductions are announced.

As sidelined buyers gradually return to the market, an increase in demand could trigger a sudden uptick in competition, resulting in home price appreciation. Cautious buyers are likely to enter the market sooner than later — while competition is low and inventory is building — while those with a higher risk tolerance will opt to continue to wait for further rate decreases. The fact remains that young Canadians should not be forced to “time the market.”

Young Canadians prioritizing homeownership

Despite higher home prices and borrowing costs having been prohibitive to young Canadians looking to enter the market in recent years, there’s still a strong desire to own a home.

A recent Royal LePage survey found that 84 per cent of Canadians belonging to the adult Generation Z and young Millennial cohort — those aged 18 to 38 or born between 1986 and 2006 — believe that homeownership is a worthwhile investment, and they are committed to achieving this goal. For many, this means making significant lifestyle adjustments, whether it be cutting back on expenses or postponing major life milestones. 

Our country’s ongoing and worsening housing supply shortage needs to be addressed immediately

Young Canadians are not only cutting back on discretionary spending (travel and entertainment, for example) but also making financial decisions that could impact their long-term stability, such as delaying education or saving for retirement, as well as other significant investments.

If there was any doubt, this should serve as further proof to policymakers and regulators that our country’s ongoing and worsening housing supply shortage needs to be addressed immediately. While the dire need for more housing inventory grows ever more crucial, the financial stability and future opportunities of young Canadians are being impacted.

It’s quite clear that young Canadians are eager to transition from renting to owning their own home, securing their place on the property ladder as their parents did. While reduced interest rates can help make homeownership more attainable for first-time buyers, this is not the only solution to the larger, more complex challenges within Canada’s real estate economy. 

The Quebec Professional Association of Real Estate Brokers (QPAREB) August market statistics show significant growth in both Quebec City and Montreal, thanks in part to recent interest rate cuts.

Quebec City: A strong market in expansion

Last month’s residential sales in Quebec City reached 626 transactions, marking a 10 per cent year-over-year increase — the second-highest transactional activity for this time of year.

Source: QPAREB

“The strength of the Quebec City market is impressive and is firmly positioned in an expansion phase. This situation is set to continue for some time as the downward movement in interest rates is well underway. All the more so since this strengthens the confidence of households and investors in a market where the sustained increase in property prices seems unwavering,” notes Charles Brant, QPAREB market analysis director.

However, Brant cautions that rising home prices, driven by limited inventory, could offset the benefits of falling interest rates, and affordability concerns are growing as the unemployment rate edges upward.

Montreal: Market recovery driven by rate cuts

Residential sales in Montreal totalled 2,991 in August, a 9.0 per cent increase from the same period last year. Brant attributes this growth to the Bank of Canada’s three consecutive rate cuts, which have given households more purchasing power despite the moderate rise in home prices.

Source: QPAREB

“The strength of the Montreal resale market contrasts with the decline posted by many other Canadian metropolises struggling with a much higher level of household debt, lower savings and diminishing purchasing power. All these factors limit transactional activity and contribute to more instability for mortgage renewals,” he adds.

“Montreal, unlike these markets, is benefiting and will benefit even more from the downward trend in interest rates. Buyers have more maneuvering room since household income tends to be similar to that of other major Canadian cities yet home prices remain almost half as high.”

Market highlights

Quebec City saw single-family home sales jump by 13 per cent, with a median price increase of 9.0 per cent, reaching $390,000. Condominium sales rose 7.0 per cent, with a 22 per cent median price increase to $279,500.

In Montreal, single-family homes saw a 9.0 per cent increase in sales, with the median price rising by 5.0 per cent to $590,000. Condominiums led the sales increase with an 11 per cent jump, reaching a median price of $407,100.

Active listings in Montreal grew by 18 per cent, while Quebec City saw a 13 per cent decline, reflecting low inventory in Quebec City and increasing supply in Montreal.

Get more details, including by province and city.

As the long-awaited decline in interest rates begins to take shape, early insights from Re/Max brokers and agents nationwide suggest the fall’s housing market activity will be steady. According to Re/Max’s 2024 Fall Housing Market Outlook, average sale prices for all housing types are expected to increase between one and six per cent in most regions by the end of the year.

With the next Bank of Canada (BoC) interest rate announcement scheduled for September 4, many Canadians are watching closely. A recent Re/Max survey reveals that 16 per cent of Canadians would feel more comfortable entering the real estate market if the BoC implements a rate cut of more than 100 basis points by the end of the year.

“The fall market is usually a good early indicator for activity as we look ahead to early 2025, and we’re headed toward more healthy territory. With interest rates starting to ease, buyers are beginning to come off the sidelines,” says Christopher Alexander, president, Re/Max Canada. 

However, Alexander notes that while the market is showing signs of life, it won’t necessarily return to historical activity levels without a more substantial move from the Bank of Canada.

Consumer confidence on the rise with remaining challenges

As anticipation builds around further potential interest rate cuts, first-time homebuyer confidence is notably increasing. The survey found that 25 per cent of Canadians are actively saving for a home and believe they will soon be able to purchase, with the most optimism seen among younger Millennials and Gen Zs aged 18-24 (35 per cent).

On the other hand, some current homeowners may find that the rate cuts come too late. 14 per cent of homeowners facing mortgage renewal at higher rates are considering selling their homes due to affordability challenges.

Financial priorities for many Canadians remain focused on day-to-day expenses, such as utilities and food (58 per cent), and travel (45 per cent), with home purchases ranking among the top three priorities for 25 per cent of respondents. Meanwhile, affordability concerns are prompting 28 per cent of Canadians to consider relocating to another country, and 25 per cent are reconsidering starting a family.

Affordability and supply remain key concerns

“Despite some consumer confidence starting to return to the market this season, the reality is Canadians are still grappling with some serious housing affordability challenges rooted in lack of supply. Yes, borrowing is becoming less expensive, but this won’t make housing affordable in the long run,” says Alexander.

As more buyers re-enter the market and available inventory is absorbed, Alexander warns of potential upward pressure on prices. He stresses the need for a comprehensive national housing strategy developed collaboratively by all levels of government to address supply shortages strategically.

“In the meantime, buyers would be wise to work with an experienced real estate agent to help navigate those cyclical market ups and downs that often accompany this push and pull of supply and demand.”

Review the full report, including regional insights.

While there were early signs of renewed momentum in June following the Bank of Canada’s first interest rate cut since 2020, activity in Canada’s housing market took a pause in July, according to data released earlier this month by the Canadian Real Estate Association (CREA).

“With another rate cut announced on July 24, we’ve now seen two rate cuts in a row, and the expected pace of future policy easing has steepened considerably, with markets now anticipating rate cuts at every remaining Bank of Canada decision this year,” Shaun Cathcart, CREA’s senior economist, says in a statement.

“Combine that with a record amount of demand waiting in the wings, and the forecast for a rekindling of Canadian housing activity going into 2025 has just gone from a layup to a slam dunk.”

According to CREA, in July:

• National home sales decreased 0.7 per cent month-over-month
• Actual monthly activity was 4.8 per cent above July 2023
• Number of newly listed properties was up 0.9 per cent month-over-month
• MLS Home Price Index was up 0.2 per cent month-over-month but was down 3.9 per cent year-over-year (benchmark price was $718,700)
• Actual national average sale price ($667,317) was down just 0.2 per cent year-over-year

Uptick in market interest since interest rate cuts

Phil Soper, CEO of Royal LePage, says there has been a material uptick in market interest since the Bank of Canada started cutting interest rates. 

“Our principal portal which is royallepage.ca is the busiest real estate company portal in the country. Not as busy as realtor.ca … Every week I get an update from our IT team on royallepage.ca and we’ve seen a material uptick in viewership and engagement in our planning tools.”

Soper notes that a leading indicator is the increasing number of people using the site is unusual for August: “August is typically a very slow month. Things pick up at the end of August and into September. It’s indicative of re-ignited interest.”

He says the final leading indicator is the brand’s showings system, which clients use to book property showings with their realtors: “We saw an uptick in that in July. There’s clearly more interest and I believe it’s related to three principal things.

One, variable rate mortgages are cheaper given that the bank rate has come down. Two, fixed-rate mortgages are cheaper given the state of the bond market and the slowing economy — we’ve seen a real material drop in the popular five-year fixed. The third is building demand. We had this very large influx of new Canadians in 2022 (and) 2023 — a record. That’s going to put pressure on the entire housing ecosystem.”

Soper says demand is building and it will be released at some time. There will be an uptick in sales volume triggered by cheaper borrowing and pent-up demand should result in a busy fall. 

He believes those most impacted by higher interest rates, the overall lack of consumer confidence in the economy and the housing market in general are predominantly renters or first-time homebuyers. “That’s a big piece of the puzzle.”

Alberta, Nova Scotia, New Brunswick strong while Ontario struggles

Listings are going up because existing homeowners are seeing some positive indicators. However, Christopher Alexander, president of Re/Max Canada, says province by province is a different story.

“The year started off with a bang. Lots of anticipation that the Bank of Canada was going to start a series of rate cuts in the spring. That never materialized so you had this kind of malaise and slowness for several months, and then a strong majority of economists were insisting there would be rate cuts in June, so the market almost stopped in May. Then we got the rate cut and it really did nothing, but after the second rate cut we’re seeing renewed activity,” he notes.

“Alberta has been strong. New Brunswick and Nova Scotia have been pretty strong. Ontario has really struggled with slower market conditions.”

Alexander expects the market will see a renewed sense of urgency from buyers. 

“We’ve got a lot of inventory, so that should keep prices in check for the foreseeable future. We’re expecting more rate cuts and I think once the overnight rate gets to around four per cent, we’ll see sustained activity. All the indicators are showing we’re entering healthy territory again which is a good thing,” he says. 

‘End of the slump in most of Canada by end of this year’ but deeper rate cuts needed

Robert Hogue, assistant chief economist with RBC Economics, described the Canadian real estate market as slow, generally speaking, with obviously some variances across the country. Prices are mostly flat and some condominium prices are under pressure.

“We’ll need more interest rate cuts to get the market going,” he notes. “It’s a fairly slow grind this summer but it remains our view that as we get more rate cuts it’s going to translate more into lower mortgage rates, and that should get the market going a little faster.

We’re not expecting a big boom or anything like that but it will be the end of the slump in most of Canada by the end of this year.”

Hogue says the Bank of Canada’s interest rate cuts in June and July likely marked a turning point for struggling housing markets across the country, but so far the impact has been mixed. He says it will take deeper rate cuts to meaningfully reduce ownership costs and stimulate homebuyer demand more broadly.

“Supply, on the other hand, continues to grow. In some cases, such as in Toronto, it reflects the completion of many newly built units (mainly condominiums) that owners (mainly investors) are looking to offload. In other cases, it could be sellers betting lower rates will spur buyer interest and improve sale outcomes. In some, it may be a sign of homeowner distress arising from high rates,” notes Hogue.

He goes on to say that the balance between supply and demand varies considerably from market to market. “Conditions in Calgary, Edmonton and, to a lesser extent, Montreal favour sellers. It’s the opposite in the Toronto area where buyers have the upper hand — albeit just barely. A tenuous equilibrium holds in Vancouver.”

However, Hogue also points out that home prices have generally levelled off since spring. “Calgary — Canada’s housing hotspot — remains an exception, though gains have moderated recently. We see flat price trends persisting until larger rate cuts heat up demand more materially.”

Total listings up nearly 23%, sales-to-new listings below long-term average but balanced

According to CREA, at the end of July, there were about 183,450 properties listed for sale across Canada, up 22.7 per cent from the prior year but still about 10 per cent below historical averages (more than 200,000 for this time of the year). New listings were up slightly by 0.9 per cent month-over-month. 

The national sales-to-new listings ratio went down 0.8 per cent from June to 52.7 per cent last month. CREA notes the long-term average for the national sales-to-new listings ratio is 55 per cent, with a ratio between 45 per cent and 65 per cent generally consistent with balanced housing market conditions.

Despite gaining momentum in June, after the Bank of Canada’s rate cut that month, activity in Canada’s housing market paused in July.

Last month, home sales dipped 0.7 per cent on a month-over-month basis, reversing a small portion of June’s post-first rate cut gains. There’s a likelihood of further rate cuts in the next interest rate decision with the pace of future policy likely easing.

Expectations of further policy easing and more rate cuts to come

It’s clear that we may take a while to return to the COVID era when home sales peaked in January 2021 — their highest peak since January 2009, reaching approximately 64,000 sales. Despite the 0.7 per cent drop in sales, there’s a positive side to this as sales remain close to the recorded level from June.

But after the Bank of Canada announced a second rate cut of 4.5 per cent on July 24, there have been growing expectations of further policy easing with markets anticipating additional cuts as we head into fall.

It’s good news that despite the slight dip in July, our actual monthly activity was still 4.8 per cent higher than in July 2023. As well, the number of newly listed properties increased by 0.9 per cent month-over-month with Calgary seeing a notable boost in supply.

The Home Price Index rose by 0.2 per cent from June to July, although prices remained 3.9 per cent lower than in June 2023. The national average sale price was virtually unchanged — dipping just 0.2 per cent year-over-year to $1,667,317.

A balanced market with potential for continued downward price pressure — fall will be oversupplied

Canada’s market is pretty much balanced at this point, steadily at just over four months of inventory and just over 50 per cent sales-to-new-listing ratios. This can result in continued downward pressure on prices.

All of this is correlated to the fact that national new listings inventory continued to climb in July, which is typically considered one of the slowest periods for new listings. Looking ahead into fall, there will be an oversupplied market.

Alberta and Ontario: Stabilized

The biggest price increase was observed in Edmonton and Hamilton-Burlington, whereas Calgary and Toronto both witnessed the largest average price increase, which levelled one another out. This has resulted in Alberta and Ontario stabilizing in terms of the provincial average home sales price trend over the last several months.

Interestingly enough, despite having the biggest decrease in average price, Calgary had the most number of properties listed, which contributed to the increase of 0.9 per cent of the national average. 

Source: Wowa.ca

Keeping an eye on these developments will be critical for understanding what’s in store for the industry this fall and beyond, and for helping us advise our clients well.

Between May and July, Calgary saw homes selling for above list price in over half of its neighbourhoods (54 per cent), marking a 13 per cent jump in overbidding since the first quarter of this year (41 per cent), Wahi reports.

Clearly, homebuyers in the market haven’t been waiting for further interest rate cuts. In fact, buyer competition intensified even before the Bank of Canada cut interest rates in June.

Demand is strong for Calgary real estate 

As well, the share of neighbourhoods selling at-asking increased quarter-over-quarter to 18 per cent (compared to 17 per cent in the first quarter).

This past quarter, 102 neighbourhoods were overbid and 34 sold at-asking, up from 76 and 31, respectively.

“Whether it’s buyers from other provinces attracted by Calgary’s relative affordability or locals benefitting from Alberta’s resilient economy, demand remains strong for Calgary real estate,” says Wahi CEO Benjy Katchen.

Top overbidding neighbourhoods

Overall, the top five overbidding neighbourhoods were priced lower than the top underbidding neighbourhoods, with median overbid amounts between $26,000 and $50,050.

Three were located in the Northwest quadrant, and Deer Ridge was the only neighbourhood to make the top five for overbidding in both quarters of the year so far.

Top underbidding neighbourhoods

Upper Mount Royal was the only Calgary neighbourhood to make the top five underbidding list in both quarters of the year so far.

According to the Royal LePage House Price Survey released yesterday, the aggregate price of a home in Canada rose 1.9 per cent year-over-year to $824,300 in this year’s second quarter. Despite a slowdown in activity in Canada’s priciest markets, quarter-over-quarter, the national aggregate home price increased by 1.5 per cent.

“Canada’s housing market is struggling to find a consistent rhythm, as the last three months clearly demonstrated,” says Phil Soper, president and CEO, Royal LePage. “Nationally, home prices rose while the number of properties bought and sold sagged (which is) an unusual dynamic. The silver lining: inventory levels in many regions have climbed materially. This is the closest we’ve been to a balanced market in several years.”

Soper notes that this trend is evident in the greater regions of Toronto and Vancouver, where sales are down yet prices remain stable. However, low supply and tight competition persist in the prairie provinces and Quebec.

A ‘tepid’ market response to June’s interest rate cut

Despite the Bank of Canada’s June 5 interest rate cut by 25 basis points, from 5.0 per cent to 4.75 per cent, buyers did not immediately return to the market as predicted. “This spring, with bank rate cuts highly anticipated, we saw some buyers race to get a deal done ahead of an expected spike in demand. Yet, when that first cut finally occurred in early June, market response was tepid,” says Soper.

“Not surprisingly, the quarter-point cut to the bank rate didn’t substantially improve the affordability picture. As for consumer sentiment, our early-year research indicated that only one in 10 potential homebuyers would be motivated by a tiny rate drop. The tale the market tells as rate cuts get to the point of a material reduction in the cost of borrowing should be a very different one.”

A Royal LePage survey conducted earlier this year found that 51 per cent of sidelined homebuyers would re-start their search if interest rates were reduced. However, only 10 per cent said a 25-basis-point drop would be enough for them to return to the market. 18 per cent are waiting for a cut of 50 to 100 basis points and 23 per cent need more than 100 basis points less before they’d consider resuming their search.

Prices

The Royal LePage National House Price Composite, which includes both resale and new build properties, showed that the median price of a single-family detached home increased 2.2 per cent year-over-year to $860,600. The median price of a condominium rose 1.6 per cent to $596,500. Quarter-over-quarter, the median price of a single-family detached home increased 1.8 per cent, while the median price of a condominium rose 0.8 per cent.

The national aggregate home price is well above pre-pandemic levels, recording a 30.8 per cent increase over the same period in 2019.

“2024 marks the fifth year since the pandemic and post-pandemic rebound began to wreak havoc on real estate prices. Yes, values remain well above 2019 levels, yet a 30 per cent rise in home values spread over five years, or six per cent annually, is approaching long-term norms for Canadian residential property appreciation. The market has a way of correcting mistakes.”

Inflation and interest rates

For the past two years, Canada’s housing market has seen home prices fluctuate due to higher interest rates. As the Bank of Canada carefully balances lowering the key lending rate while keeping inflation in check, some segments of the housing market have stalled.

“Canada’s housing market faces pent-up demand after two stifling years of high borrowing costs. While inflation control is crucial, persistently high rates are increasing the risk of a surge in demand when buyers inevitably return. New household formation and immigration keep fueling the need for housing, and a sudden release could create much market instability. This highlights the need for a more nuanced approach that balances inflation control with economic vitality,” adds Soper.

Statistics Canada’s latest report notes the country’s inflation rate rose to 2.9 per cent in May, up from 2.7 per cent in April. Without shelter costs, that lowers to 1.5 per cent.

Q4 2024 forecast

Royal LePage forecasts that the aggregate price of a home in Canada will increase by nine per cent in the fourth quarter of this year compared to last year’s same quarter. Home prices are expected to see continued moderate appreciation throughout the second half of 2024.

Review the full report, including regional summaries, here.

The Bank of Canada (BoC)’s recent 25 basis point drop that lowered its key overnight lending rate to 4.75 per cent sparks the questions of if and when other rate drops will follow, and what the financial impact will be on the average five-year variable mortgage holder. Zoocasa looked into this in a recent report.

Rate fluctuations and 5-year variable mortgage savings in major Canadian cities  

The report focuses on major Canadian cities. For example, in Toronto, payments can be expected to decrease by about $155 per month. This creates savings for homeowners of about $1,860 per year. In Vancouver, the average monthly change between different interest rates is $166.20, creating an average annual savings of over $1,994.

On the other side of the spectrum, Regina, the most affordable city, showed an average monthly change of $75.60 between different interest rates, resulting in an annual savings of $907.

There will be even more savings if we see further rate cuts going forward. The BoC’s next announcement will be on July 24, 2024. 

‘With lower lending rates, prospective buyers will be motivated to get off the sidelines’

Unsurprisingly, high borrowing costs can be a major challenge for current and prospective homeowners. A 2024 Zoocasa survey of 1,577 people across Canada and the United States found that over half of non-homeowners noted high prices as the main reason for not purchasing a home, despite their desire to do so.

“With lower lending rates, prospective buyers will be motivated to get off the sidelines, ultimately leading to more sales activity and the potential for an increase in prices,” says Carrie Lysenko, Zoocasa CEO.

Read the full report here.

Last month, 36 per cent of Greater Toronto Area (GTA)’s neighbourhoods were in overbidding territory, which declined for the second month in a row, after being at 39 per cent in April and 43 per cent in March, Wahi reports. A year ago, it was significantly higher at 68 per cent.

About 60 per cent of GTA neighbourhoods were in underbidding territory last month and the remaining four per cent of homes sold for asking price. It’s expected that more buyers will look to enter the market with the Bank of Canada’s recent interest rate cut.

“This week’s rate cut from the Bank of Canada will likely change consumer psychology thereby giving homebuyers the confidence to bid on properties,” says Wahi CEO Benjy Katchen.

Wahi has seen a correlation between interest rate expectations and bidding activity. After consecutive rate pauses in March and April 2023, neighbourhoods in overbidding conditions rose by 11 per cent in May 2023 to 68 per cent. Then, when rate hikes commenced in June, this pattern reversed — with the share of neighbourhoods dropping from 62 per cent to 38 per cent between June and July.

Different trends in single-family homes and condominiums

Another finding Wahi made was the difference in bidding activity by property type. Lately, there are some opposing forces at work in the GTA market.

For single-family homes (including detached and semi-detached properties), row homes and townhouses last month, 53 per cent of neighbourhoods were overbid which was down from 58 per cent in April. On the other hand, condominiums in just 11 per cent of the neighbourhoods analyzed were selling at over-asking prices, which was two per cent higher than in April.

Where buyers can find GTA properties for under $1 million

Amid the competition, buyers often need to be strategic and quick in their home search. This can include knowing which neighbourhoods are experiencing overbidding, even when they’re on the less expensive end of the spectrum.

Wahi found that most communities where houses sold for a median price of under $1 million were in overbidding territory recently, though four areas had homes selling below-asking.

Regardless of over- or under-bidding status, Oshawa was the most affordable area, with a median sold price of $775,000, while Halton Hills was the least, with a median sold price of $917,500.

Review the full analysis here.