Canada is witnessing indications of a resurgence in the housing market, with Toronto potentially experiencing a stabilization of prices by this spring, according to a recent report by the Royal Bank of Canada (RBC).
Released last week, the report highlighted that January marked the second successive month witnessing an increase in residential transactions across major markets in the country. This trend indicates a potential end to the downturn that commenced in the spring of 2022.
Robert Hogue, an economist and the author of the report, suggested that the decline in fixed-rate mortgage interest rates since November has stimulated buyer interest. Moreover, the growing anticipation of a rate cut by the Bank of Canada is modestly boosting confidence levels.
However, Hogue cautioned that a more robust and sustained recovery is not anticipated until interest rates decline further, likely in the latter half of 2024. Additionally, there have been no early signs of an increase in sellers due to elevated borrowing costs.
The report pointed out that while prices have decreased in most major markets in Canada, Calgary has seen prices maintain an upward trajectory.
RBC forecasts a one percent decline in prices nationwide in 2024, with Alberta expected to see a 2.2 percent increase and Ontario a two percent decrease.
In the Toronto area, the housing market may be on the brink of a turnaround, with recent drops in fixed mortgage rates potentially encouraging hesitant buyers to make purchases. Mild weather conditions may have also contributed to a more optimistic mood among buyers.
However, the report emphasized that stretched affordability conditions are likely to deter buyers until interest rates or property values experience more substantial declines.
The average selling price of homes in Toronto peaked at $1,334,062 in February 2022 before declining to $1,037,542 later that year. Since then, prices have largely stabilized, with minor fluctuations observed last spring.
Toronto has seen six consecutive months of price declines since July, amounting to a total decrease of $84,000, or 7.2 percent. The report anticipates that prices will reach their lowest point this spring and gradually recover in the latter half of 2024.
