October brought a surprising rebound for Toronto’s housing market, with home sales jumping 44.4% year-over-year in the Greater Toronto Area (GTA). This surge in activity has many industry experts pointing to recent interest rate cuts from the Bank of Canada as a key factor helping buyers return to the market.

Strong Sales Growth

According to data from the Toronto Regional Real Estate Board (TRREB), 6,658 homes were sold in October 2024, a significant increase compared to the same month in 2023. This surge was seen across all property types, including detached homes, semi-detached homes, townhomes, and condominiums.

TRREB President Jennifer Pearce attributed the uptick in sales to improving affordability, which is largely due to lower borrowing costs from the Bank of Canada’s interest rate cuts. Pearce noted that these rate reductions are encouraging buyers to step off the sidelines and re-enter the market, drawn by the more favorable financing conditions.

“We are still in the early stages of the Bank of Canada’s rate-cutting cycle, but it seems that more buyers are feeling confident and moving back into the marketplace,” Pearce said. She added that the combination of lower rates and relatively stable home prices is creating a “positive affordability picture” for buyers.

Home Prices Drop, But Market Conditions Tighten

Despite the surge in sales, the benchmark home price in the GTA did experience a decline. The average home price fell 3.3% year-over-year, reaching $1,060,300 in October. This price drop, however, hasn’t discouraged buyers from re-entering the market—suggesting that the lower rates have helped offset the impact of the price dip.

While the lower borrowing costs are bringing more buyers to the table, the inventory of homes available for sale has not kept up with the pace of the sales increase. New listings were up 4.3% year-over-year, but this growth in supply has not been enough to fully meet demand. As a result, market conditions are tightening, which could potentially put upward pressure on prices if this trend continues.

What Does This Mean for Buyers and Sellers?

For prospective buyers, the current market offers an opportunity to take advantage of lower borrowing costs, though finding the right property may be challenging given the relatively low inventory. The tighter market conditions mean that competition for homes may increase in the coming months, particularly for desirable properties.

On the other hand, sellers may find this to be an ideal time to list their homes, as the surge in sales suggests a strong buyer appetite. However, with inventory still somewhat limited, sellers may face pressure to price their homes competitively to attract buyers.

Looking Ahead

Although the market is showing signs of recovery, it's important to remember that the housing market remains dynamic and can shift quickly. As the Bank of Canada continues to adjust its interest rate policy, it will be interesting to see how these changes affect buyer sentiment and market activity in the coming months.

For now, it appears that the combination of lower borrowing costs and stable home prices has reignited interest in the GTA housing market, making it one to watch as we head into the final months of 2024.

Whether you're a first-time buyer, an investor, or a homeowner looking to sell, staying informed about market trends will be crucial as this recovery unfolds.

In a significant shift in Canadian immigration policy, the federal government has announced plans to reduce the country's population growth over the next few years, primarily by reducing the number of temporary residents (TRs) coming to Canada. This change is expected to have varying impacts across the country, with British Columbia (BC) and Ontario—two provinces that rely heavily on temporary residents—likely to experience the most noticeable effects. BMO Capital Markets has outlined how these changes will impact the real estate markets in these regions, offering key insights for homebuyers, renters, and investors alike.

The Impact of Immigration Changes on BC & Ontario Real Estate

In the third quarter of 2024, BC and Ontario had some of the highest shares of temporary residents relative to their overall populations—9.3% and 8.5%, respectively. These regions are set to bear the brunt of the federal government's new immigration targets, which aim to reduce the number of TRs, including international students and temporary foreign workers (TFWs).

BMO Senior Economist Robert Kavcic explains that provinces with the largest inflow of TRs are the ones most likely to see the biggest impact. “Immigration target changes are likely to weigh heavier in British Columbia and Ontario over the coming three years,” Kavcic notes, emphasizing that both provinces exceed the national target for TRs, which is set at 5%.

In particular, BC has the highest share of TFWs—temporary foreign workers who play a significant role in the economy, particularly in industries like agriculture, hospitality, and construction. However, recent policy changes will tighten the issuance of TFW permits, with a specific focus on low-wage workers. This means that BC, which currently hosts 4.8% of all temporary foreign workers in the country, could see a slowdown in population growth tied to this group. Ontario, too, is expected to feel the effects, though not as heavily as BC.

Shelter Costs in BC & Ontario Likely to Moderate

So, what does this mean for shelter costs in these provinces? According to Kavcic, we can expect to see downward pressure on housing prices, particularly in BC and Ontario, where the combination of high demand from temporary residents and supply shortages has driven up prices in recent years.

“Rental markets in Ontario and B.C., which have a pipeline of supply coming to market, will also likely see their demand curves impacted most,” Kavcic points out. As a result, rental prices in major cities like Vancouver and Toronto could see a decrease in the short term, with lower rents potentially becoming a reality as the influx of temporary residents slows. This trend may also contribute to cooling housing starts, which have been at historically high levels in these provinces.

The slowdown in immigration could help to ease the intense demand pressure that has pushed shelter costs to unsustainable heights in cities like Vancouver and Toronto. With a smaller pool of renters and potential buyers, both home prices and rental rates in these markets may stabilize or even decline, offering a much-needed relief for those struggling to enter the market or find affordable rental options.

A Buffer for Other Provinces: Atlantic Canada & Alberta

Not every part of Canada will feel the brunt of the immigration changes equally. Provinces like Alberta and Atlantic Canada, which have a lower proportion of temporary residents, are expected to experience a more muted impact. These regions are also benefiting from strong interprovincial migration, with young adults moving away from expensive housing markets like BC and Ontario in search of more affordable options.

As a result, Alberta and Atlantic Canada could see continued population growth and rising demand for housing, albeit at a slower pace compared to BC and Ontario. In fact, some cities in these regions have already seen considerable price increases as more Canadians from higher-cost provinces like Ontario and BC make the move west or east in search of more affordable housing.

The Bigger Picture: Interprovincial Migration and Buyer Psychology

In addition to the reduction in temporary residents, the broader trend of interprovincial migration is also shaping Canada’s real estate market. Young adults, particularly those in their 20s and 30s, have been fleeing expensive provinces like BC and Ontario for cities in Alberta and Atlantic Canada, where home prices are more reasonable and job opportunities are growing.

As the gap between the high-cost cities and their more affordable counterparts narrows, the incentive for interprovincial migration could diminish. This could shift buyer psychology, making it less likely that Canadians will continue to flee expensive cities if the cost of living in those cities becomes more manageable.

In BC and Ontario, the cooling of demand for both rental and owned homes may help bring prices down, providing some relief for those who have been priced out of the market in recent years. On the flip side, regions experiencing a rise in demand—like Alberta and Atlantic Canada—could see a continuation of the affordability pressures that have been building over the past few years.

Conclusion: What This Means for Homebuyers and Renters

The Canadian government’s decision to reduce the number of temporary residents coming into the country is likely to have a significant impact on the real estate markets in BC and Ontario. For renters and homebuyers in these provinces, the immediate future could bring some relief as slower population growth puts downward pressure on both rental rates and home prices.

For those in regions with lower concentrations of temporary residents—like Alberta and Atlantic Canada—housing markets could remain relatively resilient, though interprovincial migration trends will still play a key role in shaping demand.

As always, it’s important for prospective buyers and renters to stay informed about changing policies and shifting market conditions. For those currently in BC or Ontario, it might be a good time to keep a close eye on rental and housing trends, as the next few years could offer new opportunities to enter the market at a more affordable price point.

The evolving dynamics of Canadian immigration and the real estate market underscore the importance of understanding the broader economic forces at play, especially when it comes to one of the most fundamental aspects of life—finding a home.

A recent report from Statistics Canada reveals that younger Canadians are significantly increasing their net worth, largely driven by a surge in homeownership. Between 2019 and 2023, the median net worth for families with a highest earner under 35 years old soared from $56,400 to $159,100—an impressive 180% increase.

The Rise of Young Homeowners

One of the most striking findings is the increase in homeownership among Canadians under 35, which rose from 35.8% to 44.4%. This age group saw the largest percentage increase compared to others, highlighting a growing trend of young people entering the housing market. John Nicoletta, chief of Statistics Canada’s Centre for Income and Socio-Economic Well-Being Statistics, noted, “We definitely have a lot more younger homeowners,” in an interview with Yahoo Finance Canada.

These statistics contrast with other recent surveys indicating a decline in homeownership among younger age groups. However, the larger sample size of this particular survey—40,000 participants, double that of previous cycles—provides a more comprehensive view of the housing landscape.

Factors Behind the Growth

The significant rise in homeownership is primarily attributed to escalating home values and a renewed emphasis on owning property. Homeownership has become a high priority for younger Canadians, impacting their overall financial health and net worth. Nicoletta pointed out that home values have been a major contributor to this trend, reflecting the central role of homeownership in wealth accumulation.

The overall median net worth of Canadians also saw a substantial increase, rising from $381,100 in 2019 to $519,700 in 2023—a 36% boost. Adjusted for inflation, these numbers reveal a notable enhancement in financial stability for many households.

Wealth Disparities Among Homeowners

The survey highlights stark differences in net worth between homeowners and non-homeowners. For those aged 55 to 64 with homes and employer-sponsored pensions, the median net worth reached a staggering $1.4 million, while those without either stood at only about $12,000. This disparity underscores the critical importance of homeownership in building wealth in Canada.

However, some experts, like Dan Skilleter from Social Capital Partners, warn against an over-reliance on real estate as a pathway to financial security, describing the current fixation on homeownership as “dysfunctional.”

Debt and Financial Strategies

Interestingly, while the under-35 cohort has seen dramatic growth in net worth, their financial situation remains in line with what’s expected at the beginning of their careers. The median net worth for those aged 35 to 44 was approximately $409,000—almost triple that of the younger group. Additionally, younger Canadians are taking on more debt, with mortgages in the under-35 category rising from 31.2% in 2019 to 36.4% in 2023.

Notably, a growing number of younger Canadians are also accumulating wealth without homeownership. In 2023, 15% of renters under 35 had a net worth exceeding $150,000, up from just 5% in 2019. These individuals typically hold assets like real estate outside of their primary residence, Registered Retirement Savings Plans (RRSPs), and Tax-Free Savings Accounts (TFSAs).

Conclusion

The data from Statistics Canada paints a dynamic picture of younger Canadians and their increasing net worth, driven largely by rising homeownership rates. While the gains are significant, they also highlight underlying challenges in the housing market and the broader implications for financial security in Canada. As homeownership continues to play a vital role in wealth accumulation, understanding these trends will be essential for policymakers and financial advisors alike.