Housing Market Update: Canadian Real Estate in May 2024

June 17, 2024

In what was a highly anticipated move, the Bank of Canada reduced rates to 4.75% from 5%, the first cut in four years. Canada is the first of the G7 countries to do so and hopes this measure will be a lifeline to its increasingly burdened real estate buyers.

This blog takes a peek at how the housing market fared in May 2024 across some of the biggest cities in Canada – Edmonton, Calgary, Toronto, Kitchener-Waterloo-Cambridge (KWC), and Vancouver.

We also share what the Toronto Regional Real Estate Board (TRREB) forecasts while offering insights into what potential buyers and investors might expect in the coming months.

Will the recent 0.25% cut in interest rates be a pivotal step towards market stability? Let’s see.

Metro Vancouver: Climbing Prices and Rising Inventory

To no one’s surprise, Vancouver remains Canada’s most expensive housing market.

The benchmark price reached $1.21 million in May 2024, a 2.3% increase year-over-year. Detached homes dominated the high-price segment, with a 2.9% annual increase to $2.23 million. Townhouses and duplexes rose to $1.25 million, while condos saw a modest 1% bump to $832,000.

However, the noticeable increase in inventory suggests a potential turning point, and this could temper future price hikes as supply starts to meet demand.

It is also thought that the new Airbnb regulations introduced in May might influence condo prices, though it’s too early to predict their full impact.

Calgary & Edmonton: Leading the Way in Alberta

Alberta's housing market continues to heat up, with prices and sales on the rise. The benchmark home price reached a record $513,600 in April 2024, up 9.3% year over year.

Calgary’s market remains especially active, with average home prices increasing by 10.7% to $608,415. Edmonton also saw steady growth, with sales up by 54% and prices rising 5.6% to $431,387.

The overall trend shows a tightening market, with high demand and limited supply driving up prices in the province.

Greater Toronto Area (GTA): Emerging Opportunities

In contrast, the Greater Toronto Area saw a slight dip in the benchmark price to $1,117,400 in May, reflecting a broader cooling trend.

This decline is more pronounced in certain areas like Brampton, where the average prices in May 2024 were $1,002,608, a drop of 9.8%. Mississauga saw a 3.9% decrease at $1,096,142.

This trend indicates a more buyer-friendly environment. The increase in new listings by 21.1% year over year also portents more choice and potential negotiating room for buyers.

However, affordability remains a challenge, as TRREB reports a 21.7% year-over-year decline in home sales for May, attributed to buyers waiting for clearer mortgage rate relief.

Kitchener-Waterloo-Cambridge (KWC): A Market of Contrasts

Another Ontario real estate hotspot, the Kitchener-Waterloo-Cambridge market, is a mixed bag, and in-depth market research is important for buyers and investors.

While average home prices have remained relatively stable year-over-year at $818,507, there are significant variations within the region.

While Kitchener home prices decreased by 4.5% year-over-year to $766,005, Cambridge home prices increased by 2.7% to $818,797. Waterloo home prices also increased by 2.1% year-over-year to $857,476.

Looking Ahead: A Balancing Act

The recent 0.25% cut in interest rates by the Bank of Canada is a hopeful sign. It can provide much-needed relief for buyers and contribute to market stability.

Forecasts from the biggest real estate board in the country, TRREB, suggest an uptick in buyer activity as borrowing costs decrease over the next 18 months. This could bring many first-time buyers into the market and ease the tight rental market. However, there are chances that increased competition might lead to renewed upward pressure on home prices.

The state of the Canadian housing market does raise questions about long-term affordability. The country, especially the GTA and Metro Vancouver, has experienced price increases that outpace inflation and wage growth. A potential increase in unemployment can also throw up more challenges.

What can be done to mitigate this?

Policy changes aimed at increasing housing supply, such as allowing for denser development in urban and suburban centres, could be the answer to a more sustainable market.

Additionally, the timely completion of critical infrastructure projects like the Eglinton Crosstown LRT can greatly improve the economic health of these regions.

Conclusion: A Market in Transition

The Canadian housing market in May 2024 was a study transition. While some regions continue to see price increases, others are cooling down.

As always, potential buyers and investors need careful research and an understanding of regional trends before they dip their feet into the pool. Consult professionals to help you achieve the right balance of your needs and outflows.

It is hoped that the latest interest rate cut will be a step towards a more stable and balanced market, benefiting both buyers and the broader economy. And Canada looks forward to a resilient real estate sector where more buyers can afford to move into the house of their dreams.

 

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