I recently read an article about Canada being in for a “pretty rough ride.” We are being threatened with tariffs, our Federal Government is on pause, and our productivity is at an all-time low. With all this doom and gloom, where is the “good stuff” happening in Canada regarding Real Estate?

Let’s begin by looking at our mortgage rates.  

Current mortgage rates: The Bank of Canada has reduced their prime rate 5 times in 2024 from a high of 5% to where it is currently 3.25%. Last year, a 5-year mortgage rate was between 6 – 7%. Currently, the same mortgage can be secured at 4.85%. I personally just renewed a mortgage as a variable rate product at 4.6% and with the predictions of the prime dropping to 2.5% I would expect that rate to drop over the next 6 months. 

Tariffs

USA Tariffs: This is an outlier. Most people feel that we are being threatened by tariffs, however in a positive light, if the tariffs happen and the Real Estate market slumps we will still have great mortgage rates and Buyers will have the upper hand. One thing to note is that the stock market is shifting downward. When this happens, and mortgage rates in the United States are currently at 7%, we could see American investors enter the market. With our exchange rate, an American investor can purchase a home for $1,000,000 and pay only $650,000.

Market Cycles

Spring Markets: Our real estate market typically fluctuates during the winter market. In 2024, from February – to April 2024 for Durham Region, the number of homes sold increased from 745 to 948, and the prices increased by $25,000. Informed Buyers understand that the earlier they buy, the better deal they get. This is bittersweet because some Buyers ended up bidding prices up, which causes higher selling prices for happy Sellers. On a side note, the stock market is slumping with the uncertainty south of the border, and when stock prices dip, investors look to purchase Real Estate.

Investor Activity

American Investors: Adding to the last point about investors, when mortgages in the USA are 7% we start to see American investors looking to Canada to invest where they can get lower mortgage rates and with the current dollar exchange rate they can purchase a $1,000,000 home for around $650,000 Canadian. 

Mortgage Qualification Changes

Mortgage Qualification Changes. In 2024, the Federal Government made several changes to make it easier for Buyers to enter the market. The first change was increasing the cap on CMHC-insured mortgages. Previously, for a Buyer to purchase a home with less than 20% as a down payment, they could only purchase a home for less than $1,000,000. This ceiling was increased to $1,500,000, allowing people in the GTA more options for homes. Also, a change was made for first-time buyers to allow the borrower to pay back the mortgage over 30 years instead of 25. This change brings the payments down slightly and allows the Buyer to qualify for a larger mortgage. (This change also applies to new home construction.)

Pent-up demand

Here are the last 5 years of sales in the Durham Region.

• 2019 – 10,634 homes sold
• 2020 – 12,917
• 2021 – 14,714
• 2022 – 9,875
• 2023 – 8,487
• 2024 – 9,012

Since 2021, sales have plummeted, with sales peaking in 2021, followed by sales in 2022 with 4,839 fewer sales and then dropping by 6,227 in 2023. The demand is still around; it patiently awaited rates to fall. Between 2021 and 2024, Canada welcomed around 3 million immigrants and student visas, adding to a pent-up demand for places to live. 

We have much to be excited about when we look at Real Estate in 2024. I tend to focus on what is happening in the Durham Region, not the possibility of what “might” be happening internationally. Over the past week, in Oshawa, Whitby and Clarington, 16 homes were sold for more than the asking price and in total, for the first 2 weeks of 2024, in the same area, 72 homes sold firm, along with 49 sold conditionally. Over 120 homes have sold as the temps dip to – crazy, and the snow is falling.

I am looking forward to 2025 and all of the good things that come with it.

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