Owning a home is more affordable now than at any time in the past three years, according to analysis from the Royal Bank of Canada (RBC).
A negligible drop in values – down 0.2% in June compared with May – combined with an aggressive campaign of interest rate cuts by the Bank of Canada (BoC) over the past 14 months has significantly improved our purchasing power.
The BoC has reduced the base cash rate to 2.75% from 5% at the end of May 2024. It made seven successive decisions to cut rates, effectively reducing mortgage costs by 2.25%.
The RBC said ownership costs had fallen most significantly in Vancouver and Toronto, where prices have dropped due to oversupply and concerns about the local economies and job security.
While these cities have yet to shake off concern about US tariffs, unlike many other regional centres, Vancouver and Toronto remain our most expensive cities.
Bucking the trend of cheaper housing are Quebec City, Montreal and Victoria, where buyers are finding a shortage of homes for sale and, as a consequence, higher prices.
This signals that Canada’s property recovery is taking the form of a temporary, two-speed market.
The RBC said in its analysis: “Rebuilding confidence is clearly positive for the housing market, but it is unlikely to trigger a broad-based rally.
“Generally, improving trends are likely to be sustained. We see earlier interest rate cuts continuing to favourably impact affordability with price declines in some markets further aiding the process.
“Whether this will spur potential buyers into action will depend on whether de-escalation of the trade war continues to boost confidence.”
If you’re considering selling your home soon, this analysis from the RBC sends mixed signals.
While improved affordability might draw more buyers into the market, it doesn’t necessarily mean prices will rise dramatically. That’s because several factors have created the current scenario – price reductions, lower rates and steady income growth.
Here are six tips if you wish to sell now:
Price strategically – Use an experienced agent to find the right price level. Overpricing may result in the property languishing on the market. Eventually, you’ll have to discount. Ask your agent for a comparative market analysis (CMA) to guide you.
Local picture – While national trends are instructive, real estate is a hyper-local game. Some markets (Toronto and Vancouver condos) might be seeing more significant affordability gains than other market or property styles. A good agent will describe the specific affordability trends in your local market.
Pitch perfect – Your marketing strategy needs to be on point. Ensure your listing includes high-quality photos and a compelling description. A good agent should promote your property through various channels, including their network, social media and online platforms.
Sell the benefits – Subtly emphasise how the current market conditions benefit buyers. Mention attractive mortgage rates, the relative affordability compared to recent years and how this makes your property a smart investment.
Five-star presentation – In a market where buyers feel less pressure, the condition and presentation of your home becomes critical. Declutter, deep clean and finish all those minor repairs. Stage your property to achieve the best possible result.
Be flexible – Negotiating with prospective buyers is almost inevitable in this market. Don’t just talk about money. Discuss closing dates and inclusions, too. Flexibility can be key to securing a successful sale. Selecting an agent experienced in this market will prove important.