As we approach the year’s end speculation continues as to what to expect for 2024. Many say interest rates will be falling through the year, with many hoping for early signs of rate relief. There was an interruption to that narrative yesterday, when the year’s final inflation numbers were announced. The steady decline in the rate of inflation came to an end yesterday, with inflation holding steady at 3.1%. The Bank of Canada has repeatedly stated they require a steady and assured declining inflation rate to have the confidence to begin to ease benchmark rates. This interruption of the decline will likely delay rate changes further into 2024.
Many realtors across Canada believe the value of real estate in Canada has bottomed out. They believe pent up demand, record immigration and drastically lowered housing starts will inevitably lead to prices climbing in 2024. Many believe interest rate cuts will start in early 2024 sparking an aggressive return to the market from buyers, driving prices up. This “hope” is simply a possibility. It’s certainly not assured. We currently operate within a buyer’s market. Record new listings (supply) will enter the market, even if demand comes back, thus keeping pricing pressures under some control.
There will be buying opportunities through the winter months, as homeowners continue to grapple with mortgage rate adjustments from their historic lows of the last 5 years. As a buyer, you have a phenomenon that has been unique in the recent past… options and choice. In these circumstances, buyers are in the ideal position to negotiate the best deal possible. That power may erode as we approach the spring market, especially if inflation starts falling once again, and economists have confidence in pending rate cuts.
It’s been a challenging year for the real estate industry. Average prices in the London region went from $609K in November 2022, to $678K in May 2023, and back to $600K in November 2023. The market priced in a spring correction before the Canadian Fed slapped it back down with relentless rate increases. The number of homes for sale in our market almost doubled over the last year. 2024 will most assuredly bring a changed market, as slow new construction, intense population increases and incentivised rental construction start to have some effect on our market. These effects will most likely be gradual and our market has now stabilized. The swings simply won’t be as dramatic as in the past.
Happy Holidays to everyone!
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