The 2024 real estate market outperformed 2023 in sales, despite restrictions imposed by the provincial government. Increased activity was spurred by declining interest rates, which began easing in September, bolstering buyer confidence.
While 2024 featured more months with over 3,000 listings than in previous years, inventory levels remained below long-term averages. Elevated sales absorbed much of the available supply, keeping the market tight. If inventory stays constrained while demand rises, upward pressure on prices could reemerge. To address this, the Board plans to continue advocating for gentle density development in 2025.
The rate-cutting cycle, paired with a resilient economy, stabilized the housing market with modest gains in sales and prices. However, affordability challenges remain significant. While some borrowers benefited from lower rates, many—particularly those renewing mortgages—continued to face higher borrowing costs.
Despite the easing, key inflationary pressures persist. Stubbornly high energy prices, rising rental costs, and elevated mortgage payments have contributed to ongoing price pressures. Analysts warn that these factors, coupled with persistent economic slack, an elevated unemployment rate, and uncertainty regarding potential U.S. tariffs under the incoming Trump administration, will keep affordability under strain and that includes new developments.
Outlook for 2025
Looking ahead, the outlook for 2025 remains cautiously optimistic. Following five rate cuts in 2024, totaling 175 basis points, the Bank of Canada is expected to slow the pace of reductions. By mid-2025, the overnight rate may decline further from 3.25% to a range of 2.00%–3.00%, depending on inflation and economic conditions.
Bond yields, which directly impact fixed mortgage rates, are projected to hold steady at around 3.00%. For borrowers, this suggests continued gradual relief for variable-rate loans and greater predictability for fixed-rate mortgages as the year progresses.
With the stabilization of interest rates and efforts to address inventory shortages, 2025 holds potential for a more balanced housing market. However, persistent economic challenges and affordability concerns will remain key themes in the year ahead.
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