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Jan 22, 2024reading time icon7 min

Is 2024 a good time to buy a house?

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Is 2024 a good time to buy a house?
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After a complicated year for the real estate market in 2023, many people are wondering if they'll finally be able to buy a property on favourable terms this year.

So, is it time to buy a house in 2024? We answer.

The housing market under the effects of rising interest rates in 2023

First, it's important to understand that 2023 was not the best year ever for the sector. The impact of rising interest rates was a factor that significantly reduced buyers' ability to borrow. Faced with this, those who could afford to wait preferred to play the delay card.

Some experts point out that the effects of this increase have only been felt for a few months. In a press release on its forecasts for 2024, the Royal LePage agency notes that real estate prices have softened slightly in recent months. On the other hand, it reports that transactions in certain regions of the country have fallen between 20% and 30% over the past 18 months.

Buyer with a piggy bank in his hands

What will the real estate market look like in 2024?

Many people hope that 2024 will bring better news for the market. But what is the reality?

A potential drop in interest rates

First of all, many experts agree that the Bank of Canada should indeed lower its policy interest rate this year. If this forecast for the housing market in 2024 comes true, it will indeed lead to a drop in mortgage rates.

The Desjardins Group has even gone a step further, predicting a rate cut as early as April 2024. It also predicts that the policy interest rate will fall from 5% to 3.5% by the end of the year.

The rate cut would therefore be a first favorable condition for buyers. But it is not the only factor to analyze for this upcoming year.

Mortgage renewals in the spotlight

One of the most dreaded topics for homeowners is undoubtedly the renewal of their mortgage.

Data provided by Le Journal de Québec shed light on the importance of this date. We learn that nearly 28% of mortgages in Quebec will have to be renewed in the next 18 months.

For its part, the Canada Mortgage and Housing Corporation (CMHC) expects an average increase of 30% to 40% in the monthly payments of borrowers.

It will be interesting to see if homeowners can repay their mortgages after the renewals. If this is not the case, it could potentially cause a stir in the housing market. We can assume that some homeowners will resign themselves to selling their homes in order to buy a cheaper one and thus be able to afford a more reasonable mortgage repayment.

Given the current housing shortage, it's clear that homeowners who are compelled to sell their houses will find it easier to sell than to buy in the future. Buyers will be able to make good investments from time to time, but competition could be fierce.

Mid-priced homeowners more likely to sell in 2024

Broker Pierre-Olivier Vear's comments, reported in a Journal de Québec article, reveal that it's not necessarily the owners of luxury homes who are most affected by these mortgage renewals.

"People in the 450,000 to 600,000 range are having to sell their properties. As they sell, they buy back cheaper ones."

Average homeowners seem to be the most affected, while those with more upscale properties are doing well.

Money in a jar to buy a home

Will house prices go down in 2024?

Logically, the housing shortage favours a stabilization or increase in real estate values. But how should you position yourself if you want to buy a house in 2024?

Buy a house now or wait?

According to experts, prices should remain stable until mid-2024.

In the second half of the year, however, the cost of buying a home could rise. That is if the Bank of Canada lowers its key interest rate.

Royal LePage agency predicts a rise

This is the theory of the Royal LePage real estate agency, which in a recent study predicted a 5.5% increase in real estate prices in the country in the second half of the year.

TD Bank predicts lower home prices

However, forecasts from industry players are not all pointing in the same direction.

TD Bank claims that home prices could fall by an average of 10% across Canada. To justify this statement, the country's second-largest bank claims that these national declines will occur as a result of increased supply in 2 provinces: British Columbia and Ontario.

Lower interest rates: a key to these forecasts

While a market recovery in certain regions could have an impact on real estate prices in Quebec, the expected drop in interest rates should remain the main indicator to watch.

TD Bank does not forget this element and even states that it is this potential reduction in rates during the year that "prevents a more significant decline".

But what will actually happen? Royal LePage, for its part, speaks of a limited rise in prices:

"If interest rates are expected to fall [...], the days of ultra-low rates are over. In the short term, this should limit the rise in real estate prices while households adjust their buying patterns".

Little red houses

When will be the best time to buy a home in Quebec?

Given these uncertainties about long-term price trends, some buyers may be looking for a home in the spring of 2024. If the data collected so far is anything to go by, this could be the perfect time, as:

  • Prices will start to go down, according to Desjardins;
  • It will come before the potential price increase announced by Royal LePage.

Although the market remains favourable to sellers, this trend is more fragile than what we saw in 2022 and 2021, for example. High-interest rates are not conducive to a dynamic market:

  • Owners don't want to sell unless they have to;
  • The result is a shortage of properties for sale;
  • People who want to buy have to fight for the right opportunities.

By 2024, market conditions are widely expected to ease. If this is the case, buyers will likely have to be reactive to seize opportunities, as many will want to take action after a long wait.

Looking to buy a home in 2024?

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