Canada's housing market is showing signs of improvement, with Toronto expected to hit its price "bottom" this spring, according to a recent report from the Royal Bank of Canada (RBC). The report indicates that residential transactions increased for the second consecutive month in major markets across the country in January 2024, suggesting that the downturn observed since spring 2022 may have stabilized.
The report notes that there are no signs yet of a surge in sellers due to higher borrowing costs. New listings have been relatively low, tightening demand-supply conditions. However, there is a concern that mortgage renewal payment shocks could lead to distressed sales.
While housing prices have decreased in most major markets in Canada, Calgary has seen prices trending upwards. RBC forecasts a one percent decrease in prices nationwide for 2024, with Alberta expected to see a 2.2 percent increase and Ontario a two percent decrease.
The report suggests that the Toronto housing market may be turning a corner, possibly due to recent declines in fixed mortgage rates and favorable weather. However, stretched affordability is likely to keep buyers cautious until interest rates or property values adjust more significantly.
The average selling price of a Toronto home peaked in February 2022 at $1,334,062 before dropping to $1,037,542 later in the year. Since then, prices have remained relatively stable, with a recent decline noted since July 2023.
RBC anticipates that housing prices will hit their low point this spring and gradually recover in the second half of 2024, assuming that demand-supply conditions continue to tighten.
