Residential: How the Drop of Interest Rates Affects Canada’s Residential Market Forecast 2024-25
The Bank of Canada just announced the second consecutive rate cut after BOC’s first rate cut in over four years in early June.
So what does this mean for the local real estate market and your future plans to sell or buy a residential property?
CREA Scales Back Resale Housing Market Forecast
Following another quiet spring, and increased levels of supply, the Canadian Real Estate Association (CREA) has scaled back its housing market forecast for 2024 and 2025.
Since CREA’s last forecast in April, expectations around interest rate cuts this year have been dialed back. Supply has also built up by more than expected as large numbers of sellers came to the market with properties for sale in the spring; however, buyers remained on the sidelines.
While lower interest rates are still expected to gradually bring buyers back into the market going forward, a slow spring market this year along with growing levels of supply has resulted in a downward revision to the forecast for both sales and average home prices.
Some 472,395 residential properties are forecast to trade hands via Canadian MLS® Systems in 2024, a 6.1% increase from 2023.
The national average home price is forecast to climb 2.5% on an annual basis to $694,393 in 2024.
National home sales are forecast climb a further 6.2% to 501,902 units in 2025 as interest rates continue to decline and demand continues to flow back off the sidelines.
The national average home price is forecast to rise by 5% from 2024 to $729,319 in 2025.
Source: CREA, Canadian Housing Market Stats Quarterly Forecasts
WOWA: Montreal Housing Market Report
Montreal’s housing market remains significantly more affordable than Toronto and Vancouver. This affordability has attracted buyers, driving the average home price in Montreal to a record high in June 2024. Additionally, plexes, the most expensive property type in the city, have made up a larger share of sales compared to last year, further pushing up the average price.
Property Types’ Performance
Looking at the median prices and sales of Montreal’s property types.
- The median price of a single-family home in Montreal was $582,500 in June 2024, increasing 1.2% from the previous month and 5.9% year-over-year.
- The median price for condominiums increased by 2.8% year-over-year to a median price of $401,000 for June 2024. This is a 2.2% decrease compared to last month.
The median price for plexes for June 2024 was $777,000, up 7% year-over-year and down 0.4% month-over-month.
Comparison with Other Cities
The average home prices increase year-over-year:
- Montreal increased by 5.4%
- Vancouver increase by 6.2%
- Calgary increased by 12.9%, respectively
- Toronto decline of 1.7%
Transactions Volume per City (in the same time frame):
- Montreal +5.6% year-over-year.
- Toronto -16.9%,
- Vancouver -19.1%
- Calgary -13%
Meanwhile, based on the sales-to-new listings ratio, Toronto was a buyer’s market, Vancouver was in balanced market territory in June 2024, and Calgary and Montreal were both seller’s markets.
Source: WOWA, Canada’s Largest Personal Finance Encyclopedia
