For some, the 2023 year in real estate was one to forget. If you were a seller, the high interest rates either kept you from putting your home on the market or resulted in receiving a lower price than you wanted or expected.
If you were a buyer, those high interest rates reduced your budget and prevented you from buying the home that you wanted, or kept you out of the market altogether.
2024 is a new year that could be shaping up to be much different than 2023. So, let’s look at the factors that will affect this year’s GTA Real Estate Market.
2024 Real Estate Factors
- Rate Cuts
- Employment
- Buyer Confidence
- Investors Returning
- Immigration Numbers
- International Student Numbers
Rate Cuts
The Bank of Canada is expected to start cutting interest rates in 2024. When the first cut is made is unclear, but it should trigger more action on the market when it happens. The BoC held off on interest rate hikes in January which looks to be bolstering market confidence and seeing some buyers returning with enthusiasm. We will see another rate announcement March 6th and April 10th this spring.
Cuts won’t be immediate but once interest rates start coming down, more homebuyers waiting for lower borrowing costs will begin re-entering the market. This will boost the overall market feeling and more than likely, prices too. Once this happens, sellers will be more likely to list as well.
Employment
Heading into 2024, Ontario experienced three straight months of job losses while job openings also decreased. Historically stronger employment numbers bolster real estate activity by providing more people with more purchasing power. While an increasing number of renters and millennials are hoping to enter the housing market in 2024, many are leaving the GTA because of affordability concerns. Growth in real estate values in Canada has also drastically outpaced wage increases. Despite all these factors (not considering the past 2 years), Toronto and the GTA have maintained a steady flow of interested and motivated buyers. Will we start to see a greater impact due to employment factors moving forward?
Buyer Confidence
Emotionality has always had a major impact on residential real estate. How buyers and sellers are feeling about the market makes a huge difference. This is most heavily influenced by the flavour of the current media coverage and the day to day conversations people are having with their friends and family. With the Bank of Canada waiting on the consistent stifling of inflation over consecutive months before cutting rates, potential homebuyers wait. Buyers are hesitant as a result, as too many factors have yet to be determined that will shape how the economy plays out.
Investors Returning
Similar to homebuyers, investors likely need to see more indications that prices will bounce back before they decide to begin investing in real estate again. Investors tend to be more conservative in the market than end users. Whether we see investors continue to hold or return to the market, it will be a good indication of what’s to come. Home prices have fallen, but there isn’t certainty that we’ve hit bottom yet either.
Immigration Numbers
With the current Federal Immigration policy in effect until 2025, the demand for housing will continue to be great. Immigration does guide economic growth, however, by filling job vacancies and stimulating the economy. But if economic growth is weaker than anticipated and inflation remains stubbornly high, we’re in trouble. In either scenario, the federal government will be well into its plan for 450,000 new housing starts over the next decade to increase affordable supply. The number of new immigrants with construction or trade skills is on the decline. Whether the government can tackle this issue immediately will drastically impact the housing supply.
International Student Numbers
The Canadian government’s recent decision to cap the number of foreign students entering the country is expected to reduce the housing strain. By how much, though, is still unclear.
As you can see, there are a variety of factors that will determine the direction of the 2024 GTA housing market. If you have the time to wait and see how the next few months play out, take that time. If you’re unsure of what to do given your unique situation, though, I’d be happy to help.
Are you ready to move to the next stage? Let’s chat. Send me an email (hillary@hillarylane.ca) or text/phone (416-882-4707).
Photo by Daniel Novykov on Unsplash
