Goldie's Newsletter January 2024


JANUARY 2024 MARKET UPDATE

We started 2024 on a positive note. The Bank of Canada predicts that inflation will go down this year, which would lower interest rates on mortgages. This could help first-time buyers who are struggling with high rents to afford their own homes. The lower rates would give them more confidence to enter the property market.

Home sales were up in January 2024 in comparison to January 2023. This annual increase came as some homebuyers started to benefit from lower borrowing costs associated with fixed-rate mortgage products. New listings were also up year over year but by a lesser annual rate compared to sales. The resulting tighter market conditions when compared to the same period a year earlier, potentially point toward renewed price growth as we move into the spring market.

There were 4,223 sales reported through the system in January 2024 – an increase of more than 1/3 compared to January 2023. The number of new listings was also up year over year but by a lesser annual rate of approximately 6%. Stronger sales growth relative to listings suggests buyers experienced tighter market conditions compared to a year ago. The MLS Home Price Index Composite in January 2024 was down by less than 1% year over year in January. The average selling price was down by 1% year over year to $1,026,703. 


The Bank of Canada is planning to decrease its policy rate in the latter half of 2024. As a result, home sales are expected to increase further. With fewer homes for sale, buyers will face more competition in 2024. This may lead to an increase in selling prices over the next two years.

There are still some important policy matters that need attention, despite the expected improvement in housing market conditions due to lower borrowing costs. At the federal level, it is necessary to thoroughly review the Office of the Superintendent of Financial Institution (OSFI) mortgage stress test, particularly in its implementation across different phases of the interest rate cycle.

In the Province, the focus must be on the vital task of constructing 1.5 million new homes. At the municipal level, raising property taxes without consistent support from federal and provincial governments will not resolve Toronto's structural deficit. To ease the pressure on the rental market and facilitate movement across the housing spectrum, it is essential to help first-time homebuyers enter the ownership market.

Given the anticipated surge in immigration to the Greater Toronto Area in the upcoming years, a corresponding increase in available rental and purchasing options is vital to ensure individuals can confidently plan their futures with the assurance of affordable housing stability. These market dynamics will impact both buyers and sellers and if you are curious about how these changes may affect you, please feel free to reach out to me with any questions.


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