Royal LePage Upgrades National 2024 Year End Home Price

Royal LePage upgrades national year-end home price forecast as Canadian real estate market hits ‘critical tipping point’.  In 2024, Greater Toronto and Montreal home price appreciation expected to outpace former frontrunner, Calgary.

First-quarter highlights

  • National aggregate home price expected to rise 9.0% year over year in Q4 of 2024 (up from previous forecast of 5.5%).
  • Aggregate home prices in the greater regions of Toronto and Montreal expected to increase 10.0% and 8.5% year over year in Q4 2024, respectively, the highest forecasts of all major regions.
  • Royal LePage® expects home prices in the Greater Toronto Area will surpass those in Greater Vancouver in 2024.
  • Among major regions, Calgary recorded highest year-over-year aggregate price appreciation (9.7%) for the second consecutive quarter; increased 1.9% on a quarterly basis.
  • 89% of regions in the report recorded quarterly price appreciation in the first three months of the year, ahead of the traditionally busy spring market period.

RELEASED TORONTO, April 12, 2024 – Royal LePage is forecasting that the aggregate price of a home in Canada will increase 9.0 per cent in the fourth quarter of 2024, compared to the same period last year. Based on stronger-than-expected first quarter results, the previous forecast has been upgraded nationally and in most major markets.

According to the Royal LePage House Price Survey released today, the aggregate[1] price of a home in Canada increased 4.3 per cent year over year to $812,100 in the first quarter of 2024. On a quarter-over-quarter basis, the national aggregate home price increased 2.9 per cent, an indication that sidelined buyers are rebooting their real estate purchase plans ahead of expected interest rate cuts, as predicted in January.

“Consistent with our previous forecast, the market did reach a critical tipping point in the first quarter of 2024, when home prices bottomed out and began to appreciate again. Clearly, more and more buyers are motivated by the need to get ahead of rising home prices, rather than adopting the strategy of waiting for mortgage rates to fall,” said Phil Soper, president and CEO, Royal LePage.

Within the first months of the new year, the Canadian housing market has already recorded solid price appreciation and higher sales activity. Starting in July of 2023, the Bank of Canada has held rates steady through six review periods. This has prompted many homebuyers to come off of the sidelines in advance of what they expect will be a more competitive spring market that will drive home prices higher.

“Many consumers – particularly first-time buyers – who have the capacity to transact have accepted and adapted to the higher borrowing cost environment. Thus, the modestly-rising home prices we are experiencing today,” continued Soper. “Once the central bank does make a move, and that first highly-anticipated cut to rates is made, even if it is only by 25 basis points, I expect we will see the price appreciation curve steepen upwards when the highly rate-focused crowd jumps into the market.”

The Royal LePage National House Price Composite is compiled from proprietary property data nationally and regionally in 63 of the nation’s largest real estate markets. When broken out by housing type, the national median price of a single-family detached home increased 4.5 per cent year over year to $845,300, while the median price of a condominium increased 3.5 per cent year over year to $591,900. On a quarter-over-quarter basis, the median price of a single-family detached home increased 3.6 per cent, while the median price of a condominium increased 1.4 per cent. Price data, which includes both resale and new build, is provided by RPS Real Property Solutions, a leading Canadian real estate valuation company.

“While real estate boards across the country are reporting a boost in listings, which is typical as we head into the spring market rush, just about every region from coast to coast remains chronically short of housing supply,” added Soper. “While we expect that interest rate decreases will draw more buyers back into the ring, this will not be the primary driver of rising home prices – it is the severe shortage of housing in markets small and large in virtually every part of the country that remains the main culprit.”

Home prices in Canada have not yet fully recovered from the post-pandemic correction in most regions, with the aggregate price of a home in Canada sitting 5.2 per cent below the peak reached in the first quarter of 2022. However, the national aggregate home price remains well above pre-pandemic levels. In the first quarter of 2024, the aggregate price of a home in Canada recorded an increase of 29.4 per cent over the same period in 2019.

Q1 RLP National Forecast

Interest rate cuts and mortgage renewals

“Given the strong start to 2024, the cadence of the market for the balance of the year points to a normally busy spring market that will lead into an uncomfortably busy fall. It is clear we are rapidly transitioning away from a buyers’ market and back to an environment where the seller has the upper hand,” noted Soper.

By the end of 2026, almost all mortgages taken out before the Bank of Canada started raising its key lending rate in March of 2022, will have transitioned through a renewal cycle and into an elevated borrowing rate environment.[2]

“Homeowners who took advantage of the historically-low mortgage rates at the beginning of the decade have soberly accepted that their upcoming renewals will mean higher borrowing expenses. We do not see this as a material drag on the housing market. Two years into the post-pandemic period, about half of mortgages have rolled off those record lows, and Canadians continue to meet obligations to their lenders, with the national mortgage default rate remaining at near historic lows. Further, income growth and the period of flat home prices have helped to mitigate the impact of increased mortgage costs. People will go to great lengths to hang onto their homes, so we can expect a pull-back in discretionary spending, including on travel and entertainment,” said Soper.

Greater Toronto and Montreal home price appreciation to outpace Calgary

The aggregate price of a home in the greater regions of Toronto and Montreal are forecast to increase 10.0 per cent and 8.5 per cent year over year, respectively, in the fourth quarter of 2024, outpacing price gains in the city of Calgary, which was previously expected to see the greatest increase in home values this year.

“Last year, while property values dipped in most markets across the country, the Calgary real estate market bucked the trend and continued to record home price gains. While activity levels remain strong and prices continue to rise in Alberta, our research indicates that buyer demand, relative to available inventory, is strongest in the two largest urban centres in the country. We now expect Toronto and Montreal to log the highest home price appreciation this year,” added Soper.

This sustained price appreciation is expected to close the gap between the country’s two most expensive real estate markets, Toronto and Vancouver. While Vancouver remains the nation’s most expensive market today, Royal LePage predicts that the aggregate price of a home in the GTA will surpass Greater Vancouver in the second half of 2024.

Federal budget includes measures to combat housing supply and affordability crisis

Leading up to the official release of the 2024 federal budget on April 16, the Liberal government announced details of several proposed measures aimed at speeding up housing construction and boosting rental supply. Billions of dollars will be allocated to the construction and upgrading of infrastructure that is critical to support more housing. The federal government also announced the Canadian Renters’ Bill of Rights, which would require landlords to disclose a clear history of a unit’s pricing, create a countrywide standard lease agreement, and allow tenants’ monthly rent payments to count towards their credit score.

“It will be imperative for all political leaders, from every party and at all levels of government, to prioritize initiatives that support Canada’s strained housing market. Demand-side policies, both those that aim to curb buyer interest in an effort to keep a lid on prices, and financial incentives aimed at helping buyers enter the market – and as a result, create additional artificial demand – are well-intentioned mistakes, creating more demand-supply imbalance, and pushing prices northward at an increased pace,” remarked Soper.

“Focus recently has shifted to incenting the rapid construction of more homes,” he continued, “which is the solution needed to address our housing affordability challenges. These programs should extend to measures aimed at incenting investment into rental accommodation, and not just at the builder level. We need more individual property investors; small-business landlords who form an important foundation of affordable housing stock for the roughly one third of Canadians who are tenants.”

Despite a material increase in apartment unit starts in 2023, new supply continues to be outpaced by growing demand, due to new household formation and unprecedented population growth. According to the Canada Mortgage and Housing Corporation (CMHC), housing starts in the country’s six largest census metropolitan areas have remained stable over the last three years, with record condominium apartment starts offsetting the decline in single-family dwellings.[3]

Meanwhile, the country welcomed more than 470,000 new permanent residents in 2023.[4] According to the CMHC report, if immigration levels continue on this trajectory, Canada will require the construction of another four million homes – on top of what is currently projected to be built – by 2030, in order to restore affordability to levels last seen two decades ago.

Following record levels of immigration in 2022 and 2023, the federal government announced last month that it would be working to reduce the number of temporary residents to 5 per cent of the national population by 2027, down from its current level of 6.2 per cent.[5]

“The reduction of non-permanent residents, which includes international students, should have a material impact on Canada’s extremely tight rental market, easing the rate at which rents are rising by reducing competition for limited properties,” said Soper. “This move comes at a cost, however. Non-permanent residents are critical to addressing our labour shortages, and an important engine of economic growth. We will undoubtedly be easing quotas up again in the near future.”

Forecast

Royal LePage is forecasting that the aggregate price of a home in Canada will increase 9.0 per cent in the fourth quarter of 2024, compared to the same quarter last year. The previous forecast has been revised upward to reflect a stronger-than-expected first quarter.

Nationally, home prices are forecast to see strong price appreciation through the second and third quarters, and taper off in the final months of the year, as is the seasonal norm. 

Royal LePage House Price Survey Chart: rlp.ca/house-prices-Q1-2024

Royal LePage Forecast Chart: rlp.ca/market-forecast-Q1-2024

REGIONAL SUMMARIES HOUSE PRICES Q1 read on>

REGIONAL FORECAST FOR HOUSE PRICES Q1 read on>

About the Royal LePage House Price Survey

The Royal LePage House Price Survey provides information on the most common types of housing, nationally and in 63 of the nation’s largest real estate markets. Housing values in the Royal LePage House Price Survey are based on the Royal LePage Canadian Real Estate Market Composite, produced quarterly through the use of company data in addition to data and analytics from its sister company, RPS Real Property Solutions, the trusted source for residential real estate intelligence and analytics in Canada. Additionally, commentary on housing market trends and data on price and forecast values are provided by Royal LePage residential real estate experts, based on their opinions and market knowledge.

About Royal LePage

Serving Canadians since 1913, Royal LePage is the country’s leading provider of services to real estate brokerages, with a network of approximately 20,000 real estate professionals in over 670 locations nationwide. Royal LePage is the only Canadian real estate company to have its own charitable foundation, the Royal LePage® Shelter Foundation™, which has been dedicated to supporting women’s shelters and domestic violence prevention programs for 25 years. Royal LePage is a Bridgemarq Real Estate Services® Inc. company, a TSX-listed corporation trading under the symbol TSX:BRE. For more information, please visit www.royallepage.ca.

Royal LePage® is a registered trademark of Royal Bank of Canada and is used under licence by Bridgemarq Real Estate Services® Inc.

[1] Aggregate prices are calculated using a weighted average of the median values of all housing types collected. Data is provided by RPS Real Property Solutions and includes both resale and new build.

[2] The impact of higher interest rates on mortgage payments, December, 2023

[3] Housing Supply Report, Spring 2024, March 27, 2024, Canada Mortgage and Housing Corporation (CMHC)

[4] Building a stronger immigration system – Permanent residence, March 25, 2024

[5] Speaking notes for the Honourable Marc Miller, Minister of Immigration, Refugees and Citizenship: Announcement related to Temporary Residents, March 21, 2024