The Canadian Real Estate Association (CREA) has recently updated its housing market forecast for 2024 and 2025, reflecting the evolving dynamics of the market. After a relatively quiet spring and a higher-than-expected increase in the supply of homes, CREA has scaled back its earlier predictions for both home sales and average prices.
A Quiet Spring and Shifting Expectations
Earlier this year, the real estate market was quieter than anticipated. Many sellers put their properties on the market during the spring, but potential buyers largely remained on the sidelines. This imbalance led to a build-up of supply, which, combined with revised expectations around interest rates, has prompted CREA to adjust its forecast.
Initially, there was hope that interest rates would begin to decrease by the end of this year, encouraging more buyers to enter the market. However, those expectations have been tempered, and the forecast now suggests a more gradual return of buyers as interest rates slowly decline.
What Does This Mean for 2024?
For 2024, CREA forecasts that approximately 472,395 residential properties will change hands through Canadian MLS® Systems, representing a 6.1% increase from 2023. While this uptick is positive, it is a more modest growth rate than previously expected.
The national average home price is also expected to see a modest increase. CREA now predicts a 2.5% rise, bringing the average home price to $694,393. This price growth reflects the slower pace of market activity and the lingering effects of higher interest rates.
Looking Ahead to 2025
The outlook for 2025 is slightly more optimistic, with CREA forecasting that national home sales will climb by another 6.2%, reaching 501,902 units. As interest rates continue to decline, more buyers are expected to re-enter the market, driving up both sales and prices.
In terms of home prices, CREA projects a 5% increase from 2024, which would bring the national average to $729,319 in 2025. This growth is expected as demand continues to recover and more buyers find themselves able to afford homes in a lower interest rate environment.
What Does This Mean for Buyers and Sellers?
For buyers, this forecast suggests that while the market may currently offer some opportunities due to increased supply, prices are likely to rise steadily over the next two years. This gradual increase means that now might be a good time to enter the market before prices climb further.
For sellers, the forecast indicates that while the market may not be as hot as it was during the peak of the pandemic, there is still healthy demand on the horizon. As interest rates drop and more buyers return, 2024 and 2025 could see more favorable conditions for those looking to sell.
Stay Informed
As always, the real estate market is subject to change, and CREA will continue to update its forecast on a quarterly basis. The next update is expected on October 15, 2024, and will provide further insights into how the market is shaping up as we head into the new year.
Whether you're buying, selling, or simply keeping an eye on the market, staying informed is key to making the best decisions for your real estate needs.
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