Ontario has just announced a groundbreaking investment in energy efficiency, setting a new benchmark for sustainability and savings in Canada. The province’s $10.9 billion, 12-year energy efficiency initiative—the largest of its kind in Canadian history—aims to help families and businesses save money while reducing their environmental footprint.

The Home Renovation Savings Program

The flagship of this initiative is the Home Renovation Savings Program, launching on January 28, 2025. This program offers rebates of up to 30% for a variety of home energy efficiency improvements, including:

• New windows and doors

• Insulation and air sealing

• Smart thermostats

• Heat pumps

• Rooftop solar panels and battery storage systems

Later in 2025, the program will expand to include rebates for energy-efficient appliances like refrigerators and freezers. This “one-window” access for upgrades will streamline applications and make the process more accessible for homeowners.

Notably, the program extends eligibility to households using propane or oil for heating—a significant change from previous restrictions that limited rebates to homes heated by electricity.

Empowering Businesses Through Energy Efficiency

In addition to helping homeowners, the province is introducing new energy efficiency incentives for small businesses. Under the expanded Peak Perks Program, businesses such as convenience stores and restaurants can receive:

• An initial $75 incentive upon enrolment

• $20 annually for each eligible smart thermostat connected to a central air conditioning system or heat pump

This initiative complements the 12 existing Save on Energy programs, which cater to a broad spectrum of sectors, including low-income households, municipalities, agriculture, and First Nations communities.

The Impact: Savings, Sustainability, and Economic Growth

By 2036, these programs are expected to cut Ontario’s peak electricity demand by 3,000 MW—the equivalent of removing three million homes from the grid. The investment is projected to generate $23.1 billion in electricity system benefits, saving ratepayers $12.2 billion by avoiding the need for new power generation infrastructure.

“Ontario’s new $10.9 billion energy efficiency investment represents a pivotal step forward for our region's productivity and climate economy,” said Giles Gherson, President and CEO of the Toronto Region Board of Trade.

Moreover, this initiative will stimulate economic growth by creating opportunities for contractors, electricians, HVAC installers, and others involved in energy efficiency retrofits.

A Sustainable Future

Ontario is not just addressing rising energy demand but also taking a strategic approach to long-term energy sustainability. The government’s all-encompassing energy plan includes investments in nuclear energy, new transmission infrastructure, and competitive procurements for clean energy resources.

This bold vision underscores the province’s commitment to affordability, reliability, and sustainability. As Vittoria Bellissimo, President of the Canadian Renewable Energy Association, aptly stated: “These new and enhanced programs create meaningful opportunities for Ontarians to take control of their energy use and reduce costs.”

Why It Matters

The new energy efficiency programs aren’t just about saving money—they’re about empowering Ontarians to make choices that benefit their wallets and the planet. Whether you’re a homeowner planning a renovation or a small business owner looking to cut energy costs, Ontario’s energy efficiency programs offer a win-win solution

Canada’s housing crisis is at a pivotal moment. With the resignation of the current Prime Minister and an upcoming federal election likely to shift power, the trajectory of federal housing policies may soon experience dramatic changes. The choices made in the coming months will shape affordability, availability, and urban development for years to come.

A Legacy of Ambition and Criticism

The current administration has invested heavily in housing programmes aimed at addressing the crisis, such as the Housing Accelerator Fund, Affordable Housing Fund, and Rapid Housing Initiative. Despite these efforts, housing affordability and accessibility have remained out of reach for many Canadians. Critics argue that while the initiatives were ambitious, their execution fell short, leaving municipalities struggling to translate federal funding into tangible results.

A Conservative Vision for Housing Reform

If the Conservatives, led by Pierre Poilievre, ascend to power, a significant shift in housing policy is anticipated. Their proposals emphasize cutting bureaucracy, incentivising housing construction, and leveraging market mechanisms to stimulate supply. A centrepiece of their approach is the proposed removal of the goods and services tax (GST) on new homes sold for less than $1 million. This measure, intended to reduce costs for buyers and spur construction, has garnered considerable support from industry stakeholders.

The Conservatives have also floated bold ideas in their Building Homes Not Bureaucracy Act, which seeks to hold municipalities accountable for meeting aggressive housing targets. Cities failing to meet these targets could face clawbacks in federal funding, while those exceeding them would be rewarded. This performance-based funding model aims to drive systemic reform at the municipal level.

Balancing Innovation and Oversight

While the Conservative approach has been praised for its straightforward appeal, questions remain about its scope and efficacy. For instance, the GST rebate on homes is seen as a step in the right direction but may not adequately address high-cost markets like Toronto and Vancouver. Adjustments, such as extending the rebate to homes priced up to $1.5 million, could make the policy more inclusive.

Moreover, programmes like the Housing Accelerator Fund, while criticised for inefficiency, reflect a core federal strategy of using funding to incentivise municipal action. Policymakers must decide whether to overhaul such programmes or abandon them altogether. Striking the right balance between oversight and flexibility will be critical to ensuring these initiatives deliver measurable outcomes.

The Importance of a Comprehensive Plan

One of the pressing concerns is the lack of specific details in proposed Conservative policies. For instance, while the GST cut on purpose-built rental construction aligns with market-friendly principles, its future under a new government remains unclear. A clear, detailed roadmap will be essential for addressing the multifaceted housing crisis effectively.

A Crucial Juncture for Canada

As leadership transitions and electoral campaigns unfold, the direction of federal housing policy hangs in the balance. Canadians will soon face a choice between competing visions—one rooted in ambitious government intervention and another favouring streamlined, market-driven solutions. The stakes are high, with affordability, urban growth, and economic stability on the line.

The coming months will offer critical insights into how each political party plans to address one of Canada’s most pressing challenges. For the housing sector and the millions of Canadians it impacts, clarity and action cannot come soon enough.

As we step into 2025, Canada’s real estate market is poised for a transformative year. After navigating a challenging period marked by high interest rates and sluggish investment activity, signs indicate that the industry is entering a new cycle characterised by renewed investor interest and a more favourable economic environment.

Shifting Market Dynamics

Falling borrowing costs and a stabilising macroeconomic outlook are creating fertile ground for increased activity in the real estate sector. Investors, both domestic and international, are once again setting their sights on Canada, particularly in sectors such as necessity-based retail, industrial properties, and multi-family residential units. Retail properties anchored by grocery stores, for example, have emerged as prime acquisition targets, reflecting a broader trend of prioritising stability and long-term growth.

Meanwhile, residential real estate is expected to rebound strongly, driven by lower interest rates and the return of first-time homebuyers. The housing market, which has weathered prolonged downturns and a housing shortage, is now positioned for recovery. Home prices are projected to rise steadily, offering renewed confidence to buyers and investors alike.

The Role of Individual Investors

The role of individual landlords and small-scale investors is also gaining prominence. Over the past few years, rising interest rates forced many of these investors to the sidelines. However, with borrowing costs decreasing and a growing awareness of real estate as a valuable investment vehicle, more individuals are expressing interest in owning rental properties. This trend underscores the enduring appeal of real estate as a means of wealth creation and financial security.

Opportunities in the Commercial Sector

The commercial real estate sector, particularly office properties, is also showing signs of revitalisation. Suburban office spaces, in particular, have seen an uptick in demand, driven by improving leasing conditions and a preference for high-quality, professionally managed buildings. While challenges remain, particularly in downtown office markets, the gradual recovery in this sector signals a broader shift in investor sentiment.

The Road Ahead

Looking ahead, the real estate market in Canada is set to benefit from a confluence of factors, including:

• Favourable Economic Conditions: As the Bank of Canada’s rate-cutting cycle progresses, borrowing becomes more accessible, incentivising both first-time buyers and seasoned investors.

• Diverse Investment Opportunities: With growth in retail, industrial, and residential sectors, investors have a range of options to diversify their portfolios.

• Steady Home Price Growth: A projected 6% rise in home prices by the end of 2025 highlights the resilience and potential of Canada’s housing market.

While the road to recovery requires patience, the foundation for a new cycle of growth is clearly taking shape. For investors, developers, and homebuyers, 2025 offers a chance to seize emerging opportunities and play a role in shaping the future of Canadian real estate.

As 2025 begins, significant changes are coming to Ontario’s housing landscape. From enhancing tenant protections to embracing sustainable construction, these updates aim to address ongoing challenges in affordability, availability, and fairness. Here’s a look at five key housing laws and regulations taking effect this year.

1. Toronto’s New Rental Renovation Licence By-Law

This by-law is designed to prevent “renovictions,” a practice where landlords evict tenants under the guise of renovations, only to re-list units at higher rents. These actions disproportionately affect low-income and marginalized individuals, often leaving them in precarious housing situations.

To address this, landlords issuing an N13 notice to end a tenancy for renovations must now secure a Rental Renovation Licence. Requirements include:

• Approved building permits.

• A $700 application fee (waived for Multi-Tenant Housing Operators).

• A Tenant Accommodation or Compensation Plan that provides temporary housing or other supports.

When it takes effect: July 31, 2025.

2. Mass Timber Buildings Can Now Reach 18 Storeys

Mass timber construction, known for its sustainability and cost efficiency, is getting a boost with changes to the Ontario Building Code. Developers can now construct buildings as tall as 18 storeys using this innovative material, compared to the previous limit of 12 storeys.

Mass timber is celebrated for its strength, fire resistance, and environmental benefits, making it a popular choice for urban developments. These changes aim to accelerate housing construction while supporting jobs in forestry, engineering, and manufacturing.

When it took effect: January 1, 2025.

3. A Streamlined Ontario Building Code

Ontario’s updated building code simplifies construction processes and aligns more closely with the National Building Code. This harmonization eliminates unnecessary technical differences, reducing barriers for developers and making it easier to meet housing targets.

The updated code resolves over 1,730 variations between provincial and national standards, increasing alignment from 60% to 80%. A three-month grace period is in place for projects already underway under the old code.

When it took effect: January 1, 2025 (grace period ends March 31, 2025).

4. Toronto’s Final Phase of Short-Term Rental By-Laws

Toronto’s efforts to regulate short-term rentals have entered their final phase. These measures aim to preserve long-term rental housing and ensure only primary residences are used for short-term rentals.

The latest rules include:

• Increased registration fees of $375 for short-term rental operators.

• Operators must register as either entire-unit or partial-unit short-term rental operators.

• Partial-unit operators can only rent out one fewer than the total number of bedrooms available in their principal residence and cannot rent the entire dwelling at once.

When it took effect: January 1, 2025.

5. Updates to Household and High Need Income Limits

Income limits for housing assistance have been updated to reflect current data. These limits determine eligibility for support, helping ensure resources are directed to those most in need.

Household Income Limits (HILs) represent the minimum income required to afford housing without spending more than 30% of it on shelter. High Need Income Limits (HNILs) reflect households spending 50% or more of their income on housing.

For example, HNILs for one-bedroom units in Toronto increased from $37,500 to $40,500, while similar adjustments were made in other regions like Durham and Hamilton.

When it took effect: January 1, 2025.

These changes reflect Ontario’s commitment to tackling housing affordability, protecting renters, and supporting sustainable construction. Whether you’re a renter, landlord, or developer, these new rules are set to reshape the housing market in meaningful ways.

As we leave 2024 behind, Canada’s housing and mortgage markets reflect a year of resilience and adaptation. The Bank of Canada’s pivot to rate cuts, following two years of steady hikes, provided much-needed relief to borrowers, setting the stage for what’s to come in 2025.

2025 Housing Market and Interest Rate Outlook

The easing cycle combined with Canada’s resilient economy has helped stabilise the housing market. Modest gains in home sales and prices were seen across the country, though challenges remain. Borrowers renewing mortgages continue to feel the strain of elevated borrowing costs, and housing supply issues keep affordability a top concern for policymakers and buyers alike.

With cautious optimism, here’s what experts forecast for the housing market and interest rates in 2025:

Real Estate Market: Forecasts from Leading Analysts

Canadian Real Estate Association (CREA):

• 2025 Home Sales Forecast: 499,816 (+6.6% YoY)

• 2025 Home Price Forecast: $713,375 (+4.4% YoY)

• Commentary: Sales are expected to remain steady until spring 2025, followed by a sharper rebound. The potential for stronger momentum is forecast beginning in Q2 2025.

Re/Max Canada:

• 2025 National Average Price Increase: +5% YoY

• Commentary: Anticipated rate cuts in late 2024 have set the stage for a more active market in 2025, with sales expected to rise in 33 of 37 regions surveyed, and some areas seeing up to a 25% sales increase.

RBC Economics:

• 2025 Home Resales Forecast: 518,400 (+12.5% YoY)

• 2025 Home Price Forecast by Q4: $809,900 (+1.6% YoY)

• Commentary: Gradual price appreciation is expected until more significant affordability improvements occur following further rate cuts.

TD Economics:

• 2025 Home Sales Growth Forecast: +15.8%

• 2025 Home Price Growth Forecast: +8%

• Commentary: Falling borrowing costs and economic growth will support positive sales growth, bolstered by December’s mortgage rule changes.

Interest Rate Projections

The Bank of Canada is expected to slow its rate-cutting pace in 2025. After five consecutive cuts totalling 175 basis points in 2024, the central bank will likely adopt a meeting-by-meeting approach, influenced by incoming economic data.

• Overnight Rate: Expected to decline further from 3.25%, potentially settling between 2.00% and 3.00% by mid-2025.

• Bond Yields: Likely to remain stable around 3.00%, influencing fixed mortgage rates.

Borrower Impact:

• Variable-Rate Loans: Anticipated to see continued reductions.

• Fixed-Rate Mortgages: Predicted to stabilise, offering more predictability for borrowers.

Big 6 Banks: Latest Interest Rate and Bond Yield Forecasts

Final Thoughts

While 2025’s housing and interest rate outlook is cautiously optimistic, challenges remain. Borrowers and buyers should prepare for gradual improvements, keeping a close eye on economic data and policy changes. For those in the market, the coming year could present a window of opportunity as affordability begins to improve and competition intensifies.

The Housing Market Outlook for 2025

Canada’s housing market has been a challenging landscape for prospective homebuyers over the past few years. Affordability issues remain a persistent obstacle, but as we step into 2025, changes in mortgage rules, lower borrowing costs, and regional market dynamics might provide some relief for those looking to enter the market. Here’s a detailed look at what’s expected in the year ahead.

Mortgage Rule Changes: A Boost for First-Time Buyers

One of the most significant changes impacting the 2025 housing market stems from Ottawa’s late-2024 policy adjustments. These include expanded access to insured mortgages and the introduction of 30-year amortizations for certain buyers. Here’s how these changes work:

1. 30-Year Amortizations: First-time homebuyers or those purchasing newly built homes they plan to live in can now opt for a 30-year mortgage. This extension lowers monthly payments, making it easier to qualify for a mortgage, although it increases the total interest paid over the loan’s lifetime.

2. Higher Insured Mortgage Price Cap: The maximum price for an insured mortgage has risen from $1 million to $1.5 million. This change allows buyers to put down less than 20% upfront on homes within this new range, significantly reducing the savings needed to enter the market. For example, a $1.5 million home now requires a minimum down payment of $125,000 instead of $300,000.

Real estate agents like Elliott Chun from Vancouver have hailed these adjustments as game changers. The new rules could allow buyers in expensive markets like Vancouver to transition from condos to more spacious townhomes suitable for growing families. However, critics warn that increased purchasing power might drive prices higher, potentially offsetting short-term affordability gains.

Shifts in Mortgage Renewals

Another change expected to influence the housing market is the easing of stress test requirements for uninsured mortgage renewals. The Office of the Superintendent of Financial Institutions (OSFI) has announced that Canadians switching lenders won’t have to requalify under the stress test, encouraging competition and potentially leading to better rates for homeowners.

The Bank of Canada’s Rate Decisions

The Bank of Canada’s actions in 2024—cutting its policy rate five times—have set the stage for a more favourable borrowing environment in 2025. While further cuts are anticipated, they are likely to be modest. Fixed mortgage rates, influenced by bond market expectations, are expected to remain in the mid-to-low 4% range, while variable rates should continue their gradual decline. However, industry experts caution that overall affordability remains limited as high home prices persist.

Predicted Home Price Trends

Home prices are projected to climb in 2025, with Re/Max Canada forecasting a 6% increase in the average price. Single-family detached homes are expected to see a 7% rise, reaching just over $900,000, while condos are set to grow by 3.5%, hitting $605,993. The influx of new condo completions may offer more options for first-time buyers, particularly in urban markets.

Market Dynamics and Regional Variations

Realtors are suggesting the potential for a more stable housing market in 2025, with less dramatic booms or busts. Yet, regional disparities will play a significant role. In cities like Vancouver, where demand for detached homes remains strong and inventory tight, competition is likely to intensify. Conversely, the condo market may soften as increased supply and downward pressure on rents create more opportunities for buyers.

The Broader Economic Context

Canada’s sluggish economy and potential trade disputes with the U.S. could dampen the housing market’s momentum. Rising unemployment or economic instability would likely curb homebuying activity. Additionally, many Canadians renewing their mortgages in 2025 will face higher rates, potentially impacting household spending and economic growth.

What to Expect in 2025

The combination of new mortgage rules, lower borrowing costs, and regional trends sets the stage for a more dynamic housing market in 2025. While affordability challenges persist, the outlook suggests increased activity, particularly among first-time buyers. The spring market is expected to be especially competitive, driven by improved accessibility and pent-up demand.

For Canadians navigating this evolving landscape, the key will be understanding how these changes align with personal financial circumstances and long-term goals. With careful planning and a keen eye on market trends, 2025 could be a year of opportunity for prospective homebuyers across the country.

In recent years, condominiums in Canada have been central to the conversation about housing. As the need for more affordable housing grows, condos have often been seen as a critical part of the solution. However, 2024 has shown that the condo market, particularly in major cities like Toronto and Vancouver, has encountered significant struggles, raising questions about the future of new developments and housing availability in the country.

A Challenging Year for the Condo Market

The condo sector, once celebrated as the go-to solution for urban housing needs, has faced a dramatic downturn this year. With soaring interest rates, construction delays, and a shifting economic environment, the once-booming condo market has faltered. Experts agree that a combination of factors, such as rising borrowing costs and an oversaturation of supply, has created what many are calling a "perfect storm."

In the Greater Toronto Area (GTA), one of Canada's busiest condo markets, the year began on a particularly grim note. By January 2024, Canada had already experienced 10 interest rate hikes, which significantly impacted both the purchasing power of potential buyers and their sentiment. The new condo segment was hit especially hard, with more than 40 projects either delayed or put on hold. This number only continued to grow, reaching a staggering 76 by mid-year. The result? A market that’s quieter than ever, with fewer buyers and fewer new units coming to market.

According to Shaun Hildebrand, President of Urbanation, the situation in Toronto is dire. Condo resales have plummeted to their lowest levels since 2008, and the pre-sale market—largely driven by investors—has slowed to a crawl. “We’re on track for the slowest year in almost three decades,” Hildebrand notes, with fewer than 5,000 pre-sale condo transactions expected, a far cry from the 22,000 average sales seen in previous years.

Investor Exodus and the Pain of Pre-Sales

One of the most notable trends in 2024 is the significant pullback by investors, who were once integral to the pre-sale condo market. With interest rates rising and prices softening, many investors have simply walked away. As a result, construction projects are facing delays and cancellations, while those who are still holding on to their investments face escalating defaults and financial distress.

Real estate lawyer Mark Morris has been vocal about the challenges facing the new construction market. "People who bought condos in 2020 or 2021 are struggling to close," he says. "Defaults are up, and in certain areas, like ‘dog crate’ condos, prices have dropped significantly."

Builders are also feeling the strain. As construction costs rise and the market cools, many are unable to justify continuing new projects. This, combined with the growing financial burden imposed by municipalities in the form of development charges (DCs), means fewer new condo developments are being initiated. In Toronto, these charges were increased twice in 2024 alone, further discouraging construction.

A Coming Crisis?

The slowdown in condo development in Toronto is just one part of a larger, national issue. Across Canada, particularly in cities like Vancouver, the narrative has been largely the same. In Greater Vancouver and the Fraser Valley, the condo market has seen a consistent decline. By the end of 2024, presale transactions in the region are expected to fall 30% below the 10-year average, with fewer new projects being launched. This is a worrying trend for the housing market, especially as demand for condos continues to rise.

Garde MacDonald, Director of Advisory at MLA Canada, highlights the bleak outlook for the region: "Rents have been softening, prices have stayed flat, and the buyers who existed at the start of the year are largely the same buyers that exist today." With many investors pulling back due to changing government policies and growing bureaucracy, the future of condo construction is uncertain.

Looking Ahead: Fewer Units, Higher Prices?

The biggest concern for many in the industry is what the future holds for condo supply. Experts like Jared Menkes, Executive Vice President at Menkes, warn that the current slowdown in condo development will lead to a "crisis" in the coming years. "If we don’t start projects in 2025, there will be no new deliveries in 2028," he says, pointing out the lengthy timelines required for high-rise construction.

This supply shortage could lead to even higher prices for the condos that do come to market. With fewer new projects being initiated, there will be less inventory available, and that, in turn, could make affordability even more elusive for would-be buyers and renters.

The Bottom Line: A New Era for Condos?

The condo market’s struggles in 2024 have exposed deeper issues in Canada’s housing sector. The combination of rising interest rates, investor pullback, and municipal policy changes has created a perfect storm, stalling many new developments and pushing the market into a holding pattern.

The coming years could see a significant reduction in condo supply, particularly in major markets like Toronto and Vancouver. While this might lead to higher prices in the short term, it could also exacerbate the affordability crisis that many Canadians are already grappling with.

As the government and industry stakeholders work to address these challenges, it remains to be seen whether the condo market can recover or if it will continue its downward spiral. For now, the future of Canada’s condo market is uncertain, and all eyes are on the developers, investors, and policymakers who will ultimately shape its path forward.

Bank of Canada. It all felt like the makings of a rebound. But the lingering question remains: Are we there yet?

A Long and Uncertain Journey

Instead of a straightforward path to recovery, the Canadian real estate market has felt more like an endless road trip, complete with false starts and fleeting signs of progress. For years, the narrative of “buyers on the sidelines” has dominated industry conversations, waiting for just the right conditions to re-enter the market. But what truly drives these buyers back in? The answer seems to hinge on whether prices are moving up or down.

"Buy the Dip"

The concept of "buying the dip" has gained traction, particularly among those hoping to time the market's bottom. Yet, the adage "time in the market, not timing the market" echoes for a reason. If you aim to hit the market’s lowest point, you need to be active as prices are falling. Ironically, those waiting for the dip often realize they’ve missed it, with prices already rebounding after months of declines.

This dynamic creates an important takeaway: market participants don’t just observe the market—they shape it. Buyers submitting below-market offers during downturns essentially create the dip rather than merely benefiting from it.

Recovery or Relief Rally?

Up until recently, market data suggested no clear signs of recovery. However, September saw a surprising deviation from seasonal norms, breaking away from the usual back-to-school rush. This trend continued into November, a month traditionally marked by a slowdown, with sales and prices both rising.

According to the Canadian Real Estate Association (CREA), national home sales climbed 2.8% in November compared to October, amounting to an 18.4% increase since May. Sidelined buyers appear to be re-entering the market, spurred by lower rates and improved affordability.

Buyer Activity Heats Up

Unsurprisingly, activity remains strongest in major markets such as Greater Toronto, Metro Vancouver, Calgary, and Montreal. Smaller cities in Alberta and Ontario have also reported double-digit increases in sales. This resurgence raises the question: Is this the beginning of a sustained recovery or merely a short-term response to policy changes?

While the market looks more like pre-pandemic norms (2016-2019), it feels inflated compared to last year’s lows and subdued compared to the pandemic-era highs.

Sellers Regain the Advantage

For sellers, the market has tilted firmly in their favor. The sales-to-new-listings ratio (SNLR) rose to 59.2% in November, up from the 52%-53% range earlier this year. With new listings down 0.8% month-over-month, buyers face increasing competition for a shrinking pool of homes.

The months of inventory metric dropped to 3.7 months nationally, the lowest in over a year. A balanced market typically requires 4-6 months of inventory, underscoring the imbalance between supply and demand.

Rising Prices: Genuine Growth or Illusion?

November marked a turning point for home prices, with the National Composite MLS Home Price Index (HPI) rising 0.6% from October. The actual national average sale price also jumped 7.4% compared to November 2023. Despite these gains, the HPI remains 1.2% lower year-over-year, signaling that the market hasn’t fully recovered from the downturn caused by earlier rate hikes.

This fragile recovery remains susceptible to external shocks, including future rate adjustments, economic policy changes, and broader economic uncertainties.

Supply Challenges Persist

By November’s end, Canada had just over 160,000 properties listed for sale, 8.9% more than a year ago but still below the long-term average of 178,000. While some interpret this as a structural supply deficiency, others see potential room for growth.

Notably, active listings have trended upward since the rate-hiking cycle began, indicating that supply is gradually improving but still falling short of meeting demand.

Spring Market: A Crucial Test

The upcoming spring market will likely play a pivotal role in determining the direction of Canadian real estate. Traditionally the busiest season, it often sets the tone for the year. However, potential headwinds—including recession fears, declining population growth, and rising unemployment—could dampen buyer enthusiasm. These challenges may counteract the optimism generated by lower borrowing costs.

Final Thoughts

Lower interest rates often serve as a temporary boost to the housing market, but they fail to address the underlying disparity between incomes and house prices. This leaves many buyers, particularly first-time buyers, struggling to compete. While rising home values benefit sellers and existing homeowners, they further widen the gap between the haves and have-nots.

The road to recovery for Canadian real estate remains uncertain. While recent momentum provides hope, it’s clear that the journey is far from over. The market must navigate a delicate balance of economic pressures, policy shifts, and buyer sentiment to sustain meaningful growth.

As 2024 winds down, the Canadian housing market is showing signs of resilience, with home sales continuing to climb. November 2024 saw a notable 2.8% increase in home sales compared to October, extending the growth that began in the previous month. This uptick reflects a broader recovery, as national home sales are now 18.4% higher than they were back in May, just before interest rate cuts started to impact the market.

Key Factors Driving the Market Rebound

The November surge in sales was particularly noticeable in major urban centres, including Greater Vancouver, Calgary, Greater Toronto, and Montreal. Smaller cities in Alberta and Ontario also saw impressive double-digit increases in home sales. Shaun Cathcart, Senior Economist at the Canadian Real Estate Association (CREA), attributes the rise to a combination of factors, including lower borrowing costs and increased inventory, which have encouraged more buyers to enter the market.

"Not only were sales up again, but with market conditions tightening, prices began to rise at the national level for the first time in over a year and a half," said Cathcart. He noted that while it's typical to see a slowdown in the market before spring, the Bank of Canada's recent interest rate cut and the loosening of mortgage rules could lead to a more active winter market than usual.

Home Prices See Modest Increase

In addition to rising sales, home prices are also showing signs of upward movement. The National Composite MLS® Home Price Index (HPI) rose by 0.6% in November from October—the largest month-over-month increase since July 2024. This marks a significant shift, as prices had been largely stagnant or falling for much of the past year.

However, despite the monthly gains, the HPI remains down 1.2% compared to November 2023, highlighting ongoing year-over-year price pressures. Meanwhile, the actual national average sale price stood at $694,411 in November 2024, which represents a 7.4% increase from the previous year.

November 2024 Highlights

Here’s a closer look at some of the key statistics for the Canadian housing market in November:

• National home sales rose 2.8% month-over-month.

• Home sales were up 26% year-over-year when compared to November 2023.

• New listings declined slightly by 0.5% from October to November.

• National MLS® Home Price Index (HPI) increased by 0.6%, though it was still down 1.2% year-over-year.

• The national average sale price increased by 7.4% year-over-year, reaching $694,411.

• Sales-to-new listings ratio increased to 59.2%, up from 57.3% in October, indicating tighter market conditions.

With fewer new listings in November—down 0.5% from October—the sales-to-new listings ratio rose to 59.2%, moving closer to balanced market conditions. This figure is above the long-term average of 55%, which suggests that demand is outpacing supply in some regions.

What Does This Mean for Buyers and Sellers?

For prospective homebuyers, these trends indicate that the market is becoming more competitive, particularly in urban centres and regions with tighter inventory. With fewer properties available for sale, buyers may need to act quickly and be prepared for potential bidding wars, especially in sought-after locations.

For sellers, this is an encouraging sign. The combination of rising home prices and lower inventory means that it may be a good time to list. However, it's important for sellers to work closely with a local REALTOR® to ensure their property is priced appropriately for the current market conditions.

Looking Ahead: A More Active Winter Market?

As we head into 2025, the outlook for the Canadian real estate market remains cautiously optimistic. The Bank of Canada's recent interest rate cut has helped reduce borrowing costs, making homeownership more accessible to some buyers. Additionally, changes to mortgage rules could further fuel market activity in the coming months, potentially leading to a busier-than-usual winter.

For anyone considering buying or selling a home, consulting with a REALTOR® is always the first step to understand the local market dynamics and get expert advice tailored to your specific needs.

Final Thoughts

While Canadian home prices are still slightly below their levels from last year, the market is showing clear signs of recovery. Increased home sales, tightening inventory, and rising prices suggest that the housing market is starting to rebound after a period of uncertainty. Whether you're looking to buy or sell, staying informed and working with a trusted real estate professional can help you navigate this evolving market.

On December 15, 2024, new federal mortgage rules came into effect in Canada, aiming to make homeownership more accessible for first-time buyers and those purchasing newly built homes. These changes are poised to open up new opportunities in the housing market, according to real estate experts. Here’s a breakdown of the updates and how they might impact buyers and homeowners.

Key Changes to the Mortgage Rules

1. Increased Price Cap for Insured Mortgages

For the first time since 2012, the price cap for mortgages insured against default has risen from $1 million to $1.5 million. This adjustment allows more buyers to qualify for mortgages with smaller down payments. Previously, homes priced over $1 million required a minimum 20% down payment. Now, those purchasing homes below $1.5 million may be eligible to put down as little as 5%.

2. Extended Mortgage Terms for First-Time Buyers

First-time buyers and purchasers of newly built homes with insured mortgages can now opt for a 30-year amortization period instead of the 25-year limit. This change, which expands on an earlier policy implemented in August 2024, provides buyers more time to pay off their mortgage balance, potentially increasing their purchasing power.

3. Refinancing Flexibility

Homeowners with insured mortgages can now refinance up to $2 million to build additional dwelling units, such as laneway homes. This policy aims to encourage modest increases in housing density.

How These Changes Impact Homebuyers and Homeowners

The extended mortgage term is a game-changer for many first-time buyers. According to mortgage broker Mary Sialtsis, the previous 25-year limit may have kept some buyers out of the market. A longer amortization period can reduce monthly payments, making homeownership more attainable. However, it’s important to note that a longer term also means paying more interest over time unless borrowers make extra payments or switch to biweekly payment schedules to accelerate repayment.

The increase in the insured mortgage cap is particularly significant in high-cost urban areas like Toronto, where the median sale price for a single detached home is $1.23 million. For condos, the median price is $615,250, according to the Canadian Real Estate Board. By raising the cap, the government aims to alleviate the pressure on homes priced below $1 million, which previously faced intense competition due to down payment requirements.

Concerns About Home Price Inflation

While these updates bring hope to many aspiring homeowners, some experts caution about potential downsides. John Pasalis, president of Realosophy, warns that increasing household borrowing power could contribute to higher home prices. “This is really just a short-term policy fix that’s going to drive home prices higher,” he explained.

Navigating the New Rules

If you’re a prospective homebuyer or homeowner curious about how these changes might affect you, consulting a mortgage professional is a wise first step. “Your hopes may not be as impossible as you think,” Sialtsis said. By understanding the new rules and exploring financing options, you can make informed decisions about entering or moving within the housing market.

Final Thoughts

Canada’s new mortgage rules mark a significant shift aimed at improving accessibility for buyers and encouraging modest housing growth. While they provide new opportunities, it’s essential to consider the long-term financial implications and potential market impacts. Whether you’re a first-time buyer or a seasoned homeowner, staying informed is key to navigating these changes effectively. Consider consulting with mortgage brokers, attending housing seminars, or exploring government resources such as the Canada Mortgage and Housing Corporation (CMHC) website to stay up-to-date on policies and programs.

Yesterday, the Bank of Canada announced a significant monetary policy shift, lowering the overnight interest rate by 50 basis points to 3.25%. This marks the second consecutive rate cut of this size and the fifth consecutive reduction overall, signalling an aggressive approach amidst an uncertain economic landscape.

This decision, following October’s drop from 4.25% to 3.75%, has broad implications for the Canadian economy, particularly in areas like real estate, employment, and the cost of living.

A Double-Cut Amidst Economic Uncertainty

The latest rate cut comes as inflation sits at the Bank’s target of 2%, a stability welcomed by many. However, other economic indicators paint a more challenging picture. The unemployment rate has climbed to 6.8%, its highest level since January 2017, excluding the COVID-19 pandemic years. Additionally, the Canadian dollar continues to weaken, now standing at $0.71 against the US dollar, raising concerns about the cost of imported goods.

Economists remain divided on the Bank’s decision. While some, like Nathan Janzen of RBC Economics, argue that lower rates are necessary to support the economy, others, such as Benjamin Reitzes of the Bank of Montreal, warn that aggressive cuts could exacerbate inflationary pressures on key imports like food.

Bank of Canada Governor Tiff Macklem acknowledged these concerns, emphasizing a balanced approach. “A lower Canadian dollar makes Canadian exports more competitive in the U.S. but also increases the cost of imported goods, which we must account for in monetary policy,” Macklem said.

Impacts on the Housing Market

For prospective homeowners, the rate cut is a potential game-changer. Lower rates reduce monthly mortgage payments, making homeownership more accessible. For instance, the recent cut translates to approximately $28 in monthly savings per $100,000 of a mortgage.

This monetary shift comes at a time when the housing market is already showing signs of recovery. In Toronto, November 2024 saw 5,875 home sales — a 40.1% increase year-over-year. Nationally, October recorded 174,458 property sales, marking a 30% increase from the same period last year.

However, this increased activity could also lead to intensified competition among buyers, particularly as new federal housing policies take effect later this week. Changes such as raising the insured mortgage cap from $1 million to $1.5 million could bring more first-time buyers into the market, further driving demand.

Victor Tran, a mortgage and real estate expert at RATESDOTCA, anticipates a surge in buyers opting for variable-rate mortgages to capitalise on falling rates. “While many markets currently favour buyers, this rate cut could be the tipping point that heats up competition,” he says.

Navigating the Challenges Ahead

Despite the positive implications for housing affordability, there are broader economic challenges to address. A weak Canadian dollar and rising unemployment remain critical concerns, highlighting the need for a cautious and strategic approach.

The Bank of Canada’s next announcement on January 29, 2025, will provide further insights into its monetary policy direction. Until then, Canadians are advised to monitor market trends closely, especially those considering entering the real estate market.

On December 11, 2024, the Bank of Canada announced a reduction in its target for the overnight rate by 50 basis points, bringing it down to 3.25%. The Bank Rate is now set at 3.75%, and the deposit rate remains at 3.25%. This move is part of the Bank's ongoing effort to normalise its balance sheet following the pandemic's economic disruptions.

Economic Outlook: A Mixed Picture

The global economy is largely evolving as expected, with some notable differences across regions. In the United States, economic strength continues, fuelled by robust consumer spending and a healthy labour market. Inflation in the US has remained steady, with certain price pressures persisting. Meanwhile, the euro area is seeing signs of slower growth, and while China’s growth is being supported by strong exports and policy actions, domestic consumer spending remains subdued.

For Canada, the outlook is more tempered. The economy grew by just 1% in the third quarter, which is below the Bank's previous expectations. The fourth quarter also looks weaker than initially forecasted. Business investment, exports, and inventories were some of the major factors holding back growth. However, consumer spending and housing activity have picked up, suggesting that lower interest rates are starting to stimulate household spending. The unemployment rate in Canada rose to 6.8% in November, as employment growth lagged behind the growth in the labour force.

Government Measures Affecting Inflation and Growth

Several new policy measures are expected to impact both inflation and economic growth in the short term. The Canadian government has announced a reduction in immigration targets, which will likely result in lower GDP growth for 2025 than the Bank’s previous forecast. While this could dampen both demand and supply, the effects on inflation are expected to be muted. Additional federal and provincial measures, such as the temporary suspension of the GST on certain consumer goods, one-time payments to individuals, and changes to mortgage rules, will also influence demand and inflation trends.

The possibility of new tariffs on Canadian exports to the US, under the incoming administration, adds another layer of uncertainty to the economic outlook.

Inflation and Interest Rate Decisions

Consumer Price Index (CPI) inflation in Canada has remained around 2% since the summer, and the Bank expects it to stay close to this target over the next few years. This is a positive sign, as the Bank of Canada's primary goal is to keep inflation close to its 2% target. Despite some moderate upward pressure from housing costs and downward pressure from goods prices, inflation is expected to remain stable in the near term.

In light of the softer-than-expected growth and the ongoing inflationary pressures, the Bank decided to reduce the policy rate by 50 basis points. This action aims to support economic growth and help keep inflation within the target range of 1-3%. The Bank has already significantly reduced the policy rate since June and will continue to assess the need for further rate cuts on a case-by-case basis.

Looking Ahead

The Bank of Canada remains committed to maintaining price stability and fostering sustainable growth. The next scheduled rate announcement will take place on January 29, 2025, with a full economic outlook and inflation forecast expected at that time.

As always, the Bank’s decisions will be guided by incoming data and its ongoing assessment of the economic landscape, focusing on the long-term goal of keeping inflation near its target while supporting the broader Canadian economy.