The Ontario housing market has experienced a slowdown in home sales, leading to predictions of continued sluggishness in early 2024. Despite a decrease in prices from their pandemic-driven highs, high-interest rates and buyers waiting for further price drops have created a slow sales market across the province. Experts interviewed by CBC News have provided valuable insights into the future of the market in 2024.
Expect 'continued stagnation' in sales
Experts believe that sales volumes will remain sluggish in the first part of 2024 unless mortgage rates drop significantly or sellers lower their asking prices. Ron Butler, a broker with Butler Mortgage, states that the trend will likely continue with continued stagnation. He doubts that mortgage rates will decrease quickly enough to attract hesitant buyers. John Pasalis, president of Realosophy Realty Inc., adds that sellers need to bring down their asking prices further to offset the increased borrowing costs that buyers are facing. TD economist Rishi Sondhi predicts that sales volumes will remain relatively low in the coming year but improve compared to 2023.
Where will prices head?
There is no consensus on what will happen with prices due to conflicting supply and demand factors. While high mortgage rates are suppressing demand, rapid population growth is pushing prices upward, and new construction is struggling to keep pace. Real estate firm Royal LePage predicts a six percent rise in average home prices in the Greater Toronto Area by the end of 2024, while ReMax forecasts a three percent drop in prices in the GTA and a two percent increase in Ottawa. Butler emphasizes that "buyer sentiment" will play a significant role in price fluctuations in 2024.
New home construction forecast to slow
Premier Doug Ford's government is facing challenges in achieving its promise of constructing 1.5 million new homes in Ontario within ten years. The pace of new construction has been slower than expected, primarily due to high interest rates, inflation increasing building material costs, and a labor shortage in the construction industry. TD economist Rishi Sondhi predicts a fall in housing starts in 2024, based on a decline in sales in the pre-construction market over the past two years. However, Sondhi does not foresee a collapse in new home construction, thanks to expected growth in purpose-built rental housing exempt from HST.
Uncertainty for the condo sector
Condominiums in Ontario face challenges in 2024, particularly as a large proportion are owned by investors. As mortgage renewals approach, it may become harder for investors to afford their condos. This could result in more investors selling off properties due to high debt and interest rates. Additionally, many investors who planned to convert condos into short-term rentals may now be looking to sell. Sales of new condos in the GTA have already declined significantly, dropping by 47 percent in a year, according to a report from research firm Urbanation.
While the Ontario housing market in 2024 may experience continued stagnation in sales and uncertainty in prices and new construction, there are also opportunities for growth in certain areas. It's essential for buyers, sellers, and investors to carefully evaluate market conditions and make informed decisions.
