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  • Writer's pictureJose Gustavo Salcedo

2024 housing market and interest rate forecasts

Updated: Jan 9

2024 housing market and interest rate forecasts

In 2023, Canadian mortgage holders faced challenges with increased interest rates, but there's optimism for relief in 2024. The Bank of Canada implemented rate hikes in 2022 and three more in 2023, affecting variable-rate borrowers and mortgage renewals. While delinquency rates rose slightly, most borrowers remained resilient.

Looking ahead, about $251 billion in mortgages are set for renewal in 2024, and $352 billion in 2025, with an expected 8 in 10 mortgage holders facing payment increases by 2025. Despite this, anticipated interest rate cuts should alleviate the payment shock.

In 2024, falling interest rates are predicted to support a rebound in home sales and prices. However, forecasts differ on growth rates. Here's a summary of housing market predictions for 2024:

Canadian Real Estate Association (CREA):

2024 home sales forecast: 490,257 (+9% YoY)

2024 home price forecast: $690,916 (+1.5%)

Commentary: Expect a rebound in national home sales as interest rates decrease, placing activity close to pre-pandemic levels.

Royal LePage:

2024 aggregate house price forecast (Q4): $843,684 (+5% YoY)

Commentary: 2024 is seen as a tipping point, with the ultra-low interest rate era ending. Modest rate cuts are expected to lead to mid-single-digit borrowing costs. Re/Max:

2024 national average price increase: +0.5% YoY

Commentary: Anticipates an active 2024 with modest price increases and a balanced market.

RBC Economics:

2024 home resales forecast: 496,000 (+9.4% YoY) 2

024 home price forecast (Q4): $799,900 (+1.9%)

Commentary: Home resale activity in Ontario and BC may stay quiet until interest rates fall. Affordability is expected to improve gradually.

TD Economics:

2024 home sales growth forecast: +5.2%

2024 home price growth forecast: +0.5%

Commentary: Economic weakness poses a downside risk, but population growth may contribute to housing shortages and higher prices.

Interest Rate Forecasts for 2024:

Bond markets suggest a 15% chance of a rate cut in January. Economists anticipate the first Bank of Canada rate cut by mid-year.

Forecasts from major banks expect the overnight target rate to fall to at least 4.00% by the end of 2024 from the current 5.00%.

Bond yields, leading fixed mortgage rates, are expected to have peaked, resulting in rate cuts by major banks since October.

Overall, 2024 holds potential for a housing market rebound, driven by anticipated interest rate cuts, but varying forecasts highlight uncertainties in the economic landscape.

Source From: Wealth Professional

Adapted by Jose Gustavo

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