Home sales and prices edging up as housing market 'could get interesting,' reports say

A man walks past houses in Vancouver, which is expected to be overtaken by the Greater Toronto Area in 2024 as the city with the highest home prices, according to a new report from Royal LePage.

The housing market could soon get “interesting,” economists say, as home prices and sales start to edge up, according to a pair of new reports released Friday.

In its latest quarterly Home Price Update and Market Forecast, Royal LePage is forecasting that the aggregate price of a home in Canada will increase nine per cent in the fourth quarter of 2024, compared to the same period last year.

At the same time, the Canadian Real Estate Association (CREA) said home sales activity recorded over its listings data edged up 0.5 per cent between February and March 2024, holding around 10 per cent below an average of the last 10 years.

But CREA added that weekly tracking showed “a bounce in new supply” around the second week of March, leading to a burst of sales and a jump in listings in the first week of April.

“We’ll have to wait for the April data to really understand how buyers are responding to all these new properties for sale, but if you look at last spring as a guide and add to that record population growth in the last year and a central bank that is far more likely to cut this summer than raise like it did last year, it could get interesting,” said Shaun Cathcart, CREA’s senior economist, in a news release.

“Will the story be high interest rates keeping a lot of people on the sidelines this year, or the much expected and anticipated first rate cuts enticing a lot of people back into the market? Probably a bit of both.”

Toronto to outpace Vancouver

Royal LePage also said it expects that home prices in the Greater Toronto Area will surpass those in Greater Vancouver in 2024.

The aggregate price of a home in Toronto is forecast to increase 10 per cent year over year. In Montreal, it’s expected to increase 8.5 per cent year over year. Royal LePage calculates the aggregate price using a weighted average of the median values of all housing types collected.

Those rates will outpace price gains in Calgary, “which was previously expected to see the greatest increase in home values this year,” the report notes.

Calgary is still the strongest larger market in Canada, with all its listings clearing within the month and prices now up 11 per year over year, wrote Robert Kavcic, senior economist with BMO, in a note.

“Vancouver and Toronto remain largely balanced (stronger conditions in single-detached versus condos),” he wrote. “Montreal’s market is nudging into sellers’ territory; and much of Atlantic Canada is still firm. Most of the softness remains concentrated around Southern Ontario.”

Eyes on the central bank

On Wednesday, the Bank of Canada held its key interest rate at five per cent for the sixth consecutive time since July but left the door open for a rate cut in June.

It’s “within the realm of possibilities,” Bank of Canada governor Tiff Macklem said during a news conference following the announcement.

Kavcic notes there are a “few interesting measures of market psychology” playing out with the expectation that rate-cuts are coming. This includes an uptick in variable-rate mortgages — up to 20 per cent in the most recent two months of  available data, he said.

“Fewer and fewer want to lock in with rate cuts presumably looming, and/or they’re discounting improved affordability ahead,” Kavcic said.

“Let’s just say that if the BoC doesn’t cut rates soon, many in the real estate market are going to be seriously disappointed.”