Realtors expect a buyer's market for condos, especially smaller units
CBC News - Jan 3, 2025
Interest rate cuts and changes to Canada's mortgage rules could set the stage for change in the Greater Toronto Area's real estate market this year, experts say.
Last year the federal government expanded eligibility for 30-year mortgage amortizations to all first-time homebuyers and all purchasers of new builds and also increased the $1 million price cap for insured mortgages to $1.5 million.
That means buyers can purchase a $1.5 million home with less than 20 per cent down.
Another factor that may help the market is interest rate cuts.
The Bank of Canada lowered its interest rate by 50-basis points to 3.25 per cent in December, marking the fifth consecutive reduction since June.
That's compared to five per cent at this time last year.
After a sluggish 2024, Royal LePage broker Shawn Zigelstein says he expects 2025 could see more activity from buyers who weren't able to enter the market before.
"People are now able to afford things a little bit more with interest rates dropping, new mortgage rules in place," he said.
"I think what we're going to start to see is a little bit of pent up demand."
However, Zigelstein says he doesn't expect a repeat of the bidding wars frenzy of the pandemic. "Those expectations can't be there anymore. The market has come back down to earth."
'Sluggish' market for micro-condos
The outlook also depends on the type of housing.
When it comes to condos, Zigelstein says he thinks the market is oversaturated due to a surplus of inventory.
"There's a lot of condominiums that are out there that are very well priced and unfortunately just aren't getting the buyers in there."
There is also some good news for renters, who make up nearly half of Toronto households.
Canadian rental prices were down 1.2 per cent in October 2024 compared to the same time last year, marking the first time that annual rents have declined since July 2021, according to a report from Rentals.ca and real estate data firm Urbanation.
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Caption: Interest rate cuts and changes to mortgage rules could mean a shift for Toronto's real estate market this year. CBC's Talia Ricci spoke to experts to find out what buyers and renters should expect.
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