Fall '24 Summary of Key Developments in the Real Estate Market

I want to provide a summary of the key developments in the real estate market and the general changes in the investment and economic scene in Canada and the US from the past week.

I receive inquiries from individuals who are either uninformed about the current real estate market conditions or are relying on outdated information. Given the market’s complexity and ever-changing nature, it can be overwhelming to process the constant influx of information. This is where a well-informed REALTOR® can distill the information, helping you make informed decisions.

Feel free to contact me to discuss the latest happenings in the real estate market.

Did you know the Fall Market is witnessing a shift in sales activity following two sluggish years? Things are moving much faster. Call for details if interested in recent sales activity.

Here are some updates that are sure to affect the Real Estate Market going forward

–Canada’s inflation rate dropped to the 2% mark last month, meeting the Bank of Canada’s target rate. This achievement was the rationale for the ten interest rate hikes since 2022. Since June 2024, there have been three rate cuts of 0.25 basis points each, aiding mortgage approvals and affordability for numerous homebuyers, as well as benefiting those with lines of credit interest.

Inflation has decreased, which should lead to lower prices for everyday necessities. The upcoming Inflation Print will serve as an additional indicator of economic conditions influencing the Bank of Canada’s rate decision on October 23, 2024. There is speculation that the rate could drop by 0.50.

— The US Federal Reserve reduced its rate by 0.50 basis points yesterday. The actions of the US regarding their interest rates also have an impact on our Canadian rates. The US Federal Reserve has just cut its policy rate by 0.50 basis points. Many suggest this paves the way for the Bank of Canada to make more aggressive cuts to a 0.50 rate on October 24, with further reductions possible if the economy persists at a lower inflation pace.

Adding to the stream of decisions and influences on the housing market are two other changes.

— CMHC has recently raised the cap on their insurable mortgage amount to $1.5 million. This indicates an increase in purchasing power, enabling more individuals who typically could not buy through the CMHC mortgage insurance program to make a purchase.

— Thirty-year amortizations are now an option, offering greater affordability for qualifying for a mortgage or managing monthly payments. However, this also means that over the span of thirty years, more interest will be paid.

These signals can suggest an uptick in the housing market sales activity going forward after a sluggish 2 year market.

— Unemployment Numbers up. Another view to consider in the economic landscape is the unemployment rate in Canada, which increased to 6.6% in August 2024, up from 6.4% earlier in the month. This marked the most significant rise in unemployment since October 2021. Market expectations were set for a 6.5% increase, but the actual figure reached 6.6%. The Bank of Canada’s Governing Council had anticipated a weakening in the labor market.

It is important to consider the backstory regarding the rise in unemployment. This increase may be linked to the dynamics of the labor market during and after the pandemic. In the summer of 2022, one in three businesses experienced difficulty in hiring staff due to labor shortages. Part of this issue stemmed from employers’ desire to offer lower wages, which led to challenges in filling positions, while another contributing factor was the significant retirement of Baby Boomers. Consequently, many employers were in search of workers to fill numerous vacancies, particularly in lower-wage positions. Canadian workers were seeking higher wages or had skills that commanded better pay. In response to these challenges, the Government of Canada modified the Temporary Foreign Workers program to relax the rules for temporary foreign workers, among

other initiatives. This program facilitated the hiring of foreign staff by businesses in the absence of Canadian labor, allowing for the importation of additional workers to fill job vacancies. However, this program has since been scaled back, potentially leading to more job opportunities in Canada due to the decrease in imported labor.

The impact of various factors on the economy may not be immediately apparent, yet it is valuable information to consider. Numerous questions and forecasts exist, but the data is constantly shifting, and there is a delay in how market activity reacts to these changes. I make an effort to stay as informed as possible. Although I am not an economist, accountant, or mortgage specialist, I do strive to stay in tune with major developments to better inform my own real estate investments and especially to assist my clients in their significant decision-making processes.

If you want to discuss current Real Estate market activity or pricing I have the information for you and can discuss the sales statistics. I am happy to help.

Denise Liboiron, REALTOR®

Real Estate Sales Representative

Century 21 All-Pro Realty (1993) Ltd

905-372-3355 office

289-251-2190 mobile/text message

Fall ’24 Summary of Key Developments in the Real Estate Market