Unlike the past few years, this spring marked one of the first markets in a number of years where buyers could leisurely browse a surplus of new listings. Despite favorable conditions, many buyers chose to hold off during the spring, waiting instead for further interest rate cuts from the Bank of Canada. With the recent announcement of the third interest rate cut of 2024 in September, the question arises: Will pent-up demand lead to a busy fall market? Here are the four market predictions our real estate experts foresee :<\/p>\n
Condo Inventory to Reach All-New Highs<\/strong><\/p>\n For much of 2024, housing inventory has been increasing across all property types in nearly every major city. However, one property type in particular is expected to stand out this fall for its significant increase: condos.<\/p>\n \u201cWe\u2019re seeing condo inventory reach unprecedented levels, driven by a surge in newly registered buildings, many of which are investor-owned, along with an increase in resale units,\u201d says Lauren Haw, Zoocasa Broker of Record & Industry Relations Officer. \u201cBuyers can expect a more diverse selection and greater negotiating power as the market becomes increasingly saturated.\u201d<\/p>\n As interest rates have increased over the past three years, the cost of holding onto investment properties, like condos, has also increased. Some landlords are struggling to cover their costs as they\u2019ve renewed their mortgage with a higher rate or have been facing steady monthly mortgage payment hikes on a variable mortgage rate. As a result, some investors have started selling off their condo properties, leading to a sharp increase in condo listings, particularly in Toronto.<\/p>\n From July 2023 to July 2024, active condo listings rose by 63.9% from 5,416 to 8,879 in the Greater Toronto Area. Looking at the City of Toronto shows a similar jump, with active condo listings increasing year-over-year by 61.5%.<\/p>\n However, this trend is not limited to the Toronto Region. Year-over-year active condo listings have increased by over 40% in London, Hamilton-Burlington, Vancouver, Ottawa, and Mississauga. Of those, Mississauga and Ottawa have seen the sharpest increases in condo inventory, rising by 51.8% and 49.7% respectively. Only Quebec City has seen a drop in the number of condos on the market, with active condo listings decreasing by 12% from 2023.<\/p>\n Increased Inventory will Put Downward Pressure on Prices<\/strong><\/p>\n As housing inventory continues to grow, prices typically soften. This trend holds true this fall, but buyers should be aware that other factors also contribute to the lowering of average prices.<\/p>\n \u201cIncreased supply continues to exert downward pressure on prices, even as the Bank of Canada lowers rates,\u201d says Haw. \u201cTypically, larger and more desirable homes\u2014often more expensive\u2014are listed in the spring to facilitate moving before a new school year. Consequently, this seasonal pattern can make average prices appear lower in the fall.\u201d<\/p>\n For buyers, it’s important to understand that lower average prices in the fall may not necessarily indicate a true decrease in property values but are instead a reflection of the mix of homes on the market. Keep this in mind when assessing local market conditions in your desired city.<\/p>\n With that being said, many major markets are already starting to experience year-over-year drops in average prices. In the Greater Toronto Area, year-over-year condo prices saw the most significant drop at 2%, compared to a 1% decrease for townhouses and a 0.1% decrease for detached properties.<\/p>\n However, cities outside of the GTA are experiencing the largest price drops. In Hamilton-Burlington, average prices for townhouses and detached homes have decreased by over 5% since July 2023. Similarly, in London and St. Thomas, average prices for townhouses and detached homes have fallen by 6.2% and 4.4%, respectively.<\/p>\n Year-to-date average residential prices have mostly increased compared to last year, with the exception of the Greater Toronto Area and London and St. Thomas, which are the only cities among the 12 we analyzed where prices have declined. In contrast, year-to-date average prices are rising the most in Calgary, Edmonton, and Saskatoon, with increases of 10%, 7.6%, and 5% respectively.<\/p>\n Competition for Desirable Homes will Be Fierce<\/strong><\/p>\n “Despite rising inventory and cooling prices, bidding wars will continue in certain areas,\u201d predicts Haw. \u201cIn highly sought-after school districts, where inventory remains low, boomers are holding off on selling their retirement homes, leading to pent-up demand for family-sized, move-up properties.\u201d<\/p>\n As boomers delay or refuse to downsize from their family homes, competition for properties that meet the needs of younger buyers with kids\u2014homes with multiple bedrooms, a yard, and located in ideal neighborhoods near local amenities\u2014will only intensify.<\/p>\n \u201cThe most desirable homes\u2014those that are move-in ready, with good layouts, easy parking, and access to schools and transit\u2014will continue to attract multiple offers,” adds Haw.<\/p>\n In Toronto neighborhoods with more than 10 public schools, some homes are selling above the average list price, even as most properties across the Greater Toronto Area are selling below their average listing prices. For instance in High Park North, Junction, and Runnymede, which has more than 12 public schools and five Catholic schools, homes sold for an average of $105,397 above the average list price.<\/p>\n As the fall market is still warming up, homes in neighborhoods near schools haven’t yet experienced intense competition. However, as the season progresses, it’s likely that competition for these properties will increase. For buyers targeting these areas, acting sooner rather than later could give you a better chance to secure a favorable deal before demand escalates.<\/p>\n Great Time to Invest in Multi-Residential Units<\/strong><\/p>\n While it may not be the first option that comes to mind, this fall could be an excellent opportunity for first-time homebuyers to consider purchasing 2-4 unit multi-residential properties.<\/p>\n \u201cWith many investors overleveraged and facing the challenge of rents not covering new mortgage payments, we expect to see more duplexes, triplexes, and fourplexes coming to market at competitive prices,\u201d explains Haw. \u201cNot only might you secure a larger property at a discount compared to other single-family homes in the area, but the potential for rental income can also make it easier to manage your mortgage.\u201d<\/p>\n Savvy buyers should watch for these opportunities as investors look to offload these units, particularly in the Toronto Region. In the Greater Toronto Area, multi-residential property listings have increased by 19.5% from August 2023 to August 2024, and in the City of Toronto, multi-residential property listings have increased by 28%. First-time homebuyers may find that their dollar goes further when qualifying for a mortgage that includes rental income potential.<\/p>\n Do you have questions about your local real estate market?<\/p>\n