National average home prices expected to Increase by 5% in 2025: Re/Max
Canada’s real estate market is expected to see rising prices in 2025, driven by growing demand and persistently limited inventory. According to Re/Max Canada’s 2025 Housing Market Outlook Report, interest rate cuts and increased consumer confidence are likely to boost sales activity across the country. However, this combination of heightened demand and constrained supply is projected to push the national average residential sale price up by 5 per cent.“While affordability challenges persist, the sequential interest rate cuts and changes to the mortgage stress test are a much-needed reprieve for those looking to get into the market,” says Christopher Alexander, president of Re/Max Canada.The report, which surveyed 37 regions across Canada, also predicts sales activity will increase in 33 of those regions, with some areas anticipating growth of up to 25 per cent.Re/Max agents across the country noted that first-time homebuyers—highlighted as the primary drivers of market activity in 81 per cent of surveyed regions—are poised to benefit most from these conditions. Shifts in market dynamics and consumer confidence Canadian consumer sentiment about the housing market remains cautiously optimistic. A Leger survey commissioned by Re/Max revealed that 36 per cent of Canadians expect housing market conditions to improve in 2025, while 73 per cent continue to believe homeownership is still the best investment they can make.Unsurprisingly, affordability challenges remain top of mind. Nearly half of Canadians believe homeownership is attainable, while 40 per cent are open to relocating to new neighbourhoods to address rising costs. Additionally, the survey found an increasing interest in climate-resilient housing, with 47 per cent of respondents prioritizing properties less likely to be impacted by climate change—a 14 per cent increase from 2024. Regional market insights: A seller’s market on the horizon The report projects that 44 per cent of Canadian housing markets will shift to favour sellers in 2025. This trend will be especially pronounced in Western Canada, where residential prices are expected to rise by three to 10 per cent. For example:Edmonton: Prices are anticipated to climb by 10 per cent, where Re/Max expects an influx of homebuyers from Calgary who’ve been priced out and looking to Edmonton for an affordable way to enter or invest in the housing market.Greater Vancouver Area: A projected price increase of 7 per cent aligns with expected sales growth of up to 20 per cent.Ontario, the country’s largest housing market, is also forecasted to experience price increases across the province, ranging from 0.1 per cent in Toronto to 10 per cent in Simcoe County. Toronto and other urban centers such as Mississauga and Kitchener-Waterloo are expected to see balanced market conditions, while regions like Sudbury and York Region are likely to favour sellers.In Atlantic Canada, prices are predicted to rise in every surveyed market, with notable increases of 8 per cent in Truro & Colchester, Nova Scotia and St. John’s, Nfld. Key trends for 2025: Inventory, buyer demographics and affordability Re/Max brokers and agents identified first-time homebuyers, move-up buyers and downsizing retirees as the leading demographic groups shaping the market in 2025. Demand for smaller, affordable properties such as townhomes and bungalows is expected to dominate, while move-up buyers are looking for larger homes.Affordability and inventory will continue to pose challenges across many regions, particularly in highly competitive markets like Toronto and Vancouver. “The current environment is more encouraging than it has been in the past few years, especially for first-time homebuyers,” Alexander notes. “However, a boost in sales, coupled with limited inventory, almost always leads to rising prices, which is the trend we’re expecting to see materialize in virtually all Canadian housing markets.” Enjoying this article?Get the latest REM articles in your inbox 3x week so you stay up to date on the latest in the Canadian real estate industry Success! Email Subscribe The post National average home prices expected to Increase by 5% in 2025: Re/Max appeared first on REM.
Sluggish Overall Mortgage Growth in Fall 2024, but Investment-Related Mortgages on the Rise
Last Updated on November 22, 2024 by CREW EditorialIn early November, the Canada Mortgage and Housing Corporation (CMHC) released its Residential Mortgage Industry Report (RMIR) for Fall 2024, offering insights into the latest trends in the Canadian mortgage market, from mortgage debt growth and borrower behaviour to investment property trends and delinquency rates. Sluggish Mortgage GrowthCanadian residential mortgage debt reached $2.2 trillion in July 2024, reflecting a modest 3.5% year-over-year increase. This slow growth rate below both recent and historical averages highlights the cautious stance many homebuyers have adopted throughout the year. Elevated borrowing costs and high home prices have kept potential buyers on the sidelines, with many waiting for more favourable conditions.However, the CMHC suggests the outlook could shift in the coming months. The Bank of Canada (BoC) has made consecutive interest rate cuts since June, including a notable 50-basis-point reduction in October. These cuts are intended to stimulate economic activity; according to CMHC Deputy Chief Economist Tania Bourassa-Ochoa, these cuts could “spark an uptick in mortgage activity through the rest of 2024 and into 2025.”Shifts in Mortgage Terms and Borrower PreferencesOne of the key trends observed in 2024 has been a shift in borrower preferences towards shorter-term fixed-rate mortgages. With expectations of further rate cuts, many borrowers are reluctant to lock into the traditional five-year fixed-rate mortgages. Instead, over half of newly extended mortgages in July were for terms of three to less than five years, driven by a minimal difference in rates between these shorter terms and the standard five-year options. For context, the rate difference between these terms was no more than 0.1% during the first seven months of the year. Meanwhile, variable-rate mortgages have fallen out of favour, comprising only 9% of new mortgages in July, down from 20% earlier in the year.Renewals in 2025A significant portion of the mortgage market faces potential turbulence in the near future, with approximately 1.2 million fixed-rate mortgages totalling over $300 billion up for renewal in 2025. Of these, more than 85% were originally contracted when the BoC’s policy rate was at or below 1%. These borrowers will encounter much higher interest rates upon renewal, which could significantly impact their financial stability, especially in the context of already elevated household debt levels. The industry and policymakers are keeping a close eye on this renewal wave, which could lead to increased financial strain for many households.Mortgage Delinquency RatesThe mortgage delinquency rate has seen a slight uptick in 2024, rising from 0.17% in Q4 2023 to 0.19% in Q2 2024. Although this increase signals a trend toward higher financial stress among borrowers, it remains below pre-pandemic levels and well under the historic average since 1990. Notably, the delinquency rate on other credit products, such as auto loans and credit cards, has also risen, suggesting broader economic pressures that may continue to affect mortgage performance into 2025.Despite the rise in delinquency rates, mortgage holders have been more resilient than non-mortgage holders, who have experienced sharper increases in delinquencies across other loan products. Growing Share of Mortgages for Investment PropertiesAn evolving trend in the Canadian mortgage market is the increasing share of mortgages directed toward investment properties. Data from chartered banks indicates a gradual decline in the proportion of mortgages used for owner-occupied homes, dropping from 75% in Q3 2019 to 70% in Q3 2023. During the same period, the share of mortgages for investment and rental properties rose to 17%, up from 13% four years earlier.Alternative Lenders and Market Share DynamicsAlternative lenders have been gaining momentum, particularly in the first half of 2024. These lenders, including mortgage investment corporations (MICs), saw their assets under management grow by 4.9% year-over-year in Q2 2024, surpassing the overall mortgage debt growth rate of 3.5%. However, according to the CMHC, the increased activity comes with higher risk, evidenced by a rise in defaults and foreclosures, particularly within the single-family home segment. Traditional lenders like the Big Six banks have maintained a dominant position in the market, holding 73.1% of outstanding mortgages. However, their share of newly extended mortgages dropped to 54.5% in Q1 2024.
4 in 5 Canadians say housing crisis is shaping life decisions, survey finds
Homeownership is becoming a pipe dream for many Canadians, according to a new survey released by Habitat for Humanity Canada. Four in five Canadians now say that buying a home feels like a luxury, while 88 per cent of renters say the goal of owning a home in Canada has become out of reach. The organization’s third annual affordable housing survey looked at the broader implications of Canada’s housing crisis. An overwhelming 82 per cent of Canadians voiced deep concern over how the housing crisis is impacting health and well-being, while 78 per cent see homeownership as a critical factor in the country’s growing wealth gap. The findings show a clear, collective anxiety across generations, with younger Canadians bearing the brunt of housing-related challenges. “Canadians are sending a clear message: the housing crisis is no longer just about housing,” says Pedro Barata, CEO of Habitat for Humanity Canada. The shrinking middle class Survey data reveals concern that the scarcity of affordable housing is fragmenting communities and threatening the middle class, with 82 per cent of respondents worried about a potential decline in this socioeconomic group. Over half of Canadians report worrying about sacrificing essentials like food, education and living expenses to cover their housing costs. Meanwhile, 41 per cent of respondents say the stress alone of not being able to buy a home is difficult for them to manage. Younger generations forced to rethink milestones Canada’s housing crisis is causing younger generations to rethink life plans. Two-thirds of Gen Z Canadians and almost half of Millennials have considered delaying starting a family because they can’t afford a suitable home, while four in ten say they have fewer job opportunities because they had to move to a more affordable area. A notable percentage (29 per cent of Millennials and 25 per cent of Gen Z) say they would consider moving abroad to find affordable housing. The survey also reveals that 73 per cent of Gen Z respondents are anxious about saving enough for a down payment. Barata emphasizes that young Canadians rethinking or delaying major life decisions could lead to “a deep and lasting impact on future generations and society as a whole.” Despite the mounting challenges, Canadians overwhelmingly support the idea of homeownership, with 87 per cent believing it offers stability, and 81 per cent seeing it as a way to build a better future for their children. Calls for action As Canada’s housing crisis grows, the survey reveals a clear demand for political action. Seventy-five percent of Canadians believe that housing policy should transcend political divides, urging a unified approach to the crisis. However, 68 per cent are skeptical that the federal government will reach its goal of building 3.87 million new homes by 2031. Canadians want policy initiatives that reduce taxes and fees for first-time buyers, promote affordable homeownership and convert unused spaces into housing. “Homeownership can’t just be the privilege of the wealthy or lucky few,” says Barata. “At Habitat we see the transformational change that happens when families own their own home, affordably. The security and peace of mind benefit their health, economic opportunities and investments in their community. It benefits all of us.”
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