Predictions of a turnaround for the Canadian property market follow a quiet transaction period as we ended 2024.
And while last December may seem a lifetime ago now, the transaction trend in many urban centres suggests there’s excellent buying opportunities if you can make your move before the 2025 market really springs into action.
As an experienced real estate agency, we believe the market will respond to a mixture of new rules that bring in 30-year mortgages for first-time buyers, low inflation and pressure on the Bank of Canada to trim further our 3.25% base interest rate.
Our major markets ran out of steam in November and December, according to the MLS Housing Price Index. However, we see this as only a blip between what had been a strong selling season last autumn and confidence in market prospects for 2025.
For an investor, it’s worth looking at some of the markets where transactions fell in the last weeks of 2024, as these could promise attractive prices before the upturn.
Calgary and Toronto fell back between November and December, where local agents suggested a slight increase in five-year, fixed-term mortgages dampened buyer enthusiasm.
One media source described Toronto as “awash with condos” for sale now.
Condo prices fell 3.7% year-on-year in December. However, the median price for a detached home in the city rose for the first time in a year, hitting $1,094,000.
Data published by RBC Economics suggests Edmonton dipped slightly in December, but it remains at near-record transaction levels.
Slow progress to increase deal numbers continues in Vancouver, and momentum is likely to build in Montreal.
The RBC Economics report said: “We believe further interest rate cuts by the Bank of Canada will stimulate homebuyer demand in 2025—keeping the rally going in most markets..
“We expect measured appreciation trends to persist in 2025. Edmonton and Montreal—possibly the hotter and tighter markets in Canada right now—could see stronger price growth if supply stays short of demand. On the other hand, condo prices could edge lower in Toronto if the inventory of available units continues to mount.”
Here are six tips for investors for the current market:
Secure Financing Now: Time may be on your side, but not for long. Secure a mortgage pre-approval so you can move quickly.
Identify Undervalued Properties: Talk to agents about off-market sales and distressed sales. You have the time to investigate such possibilities as the market gradually finds momentum.
Up-and-Coming Areas: Research neighbourhoods with growth potential where prices might take a little longer to catch the wave of market optimism.
Don’t rush: Due diligence is always essential, Make sure you undertake thorough inspections. Watch for potential problems that could become costly repairs later, and use them to negotiate a better price.
Don’t Over-Extend: Ensure you have a financial safety net to cover unexpected expenses and vacancies. Consider diversifying in terms of property style and cities, as this spreads your risk.
* Important: These tips are for informational purposes only and not financial advice. It’s crucial to consult with a qualified financial advisor before making any investment decisions.