Sunday Dock Read – Labor Day & Looking Forward
Why This Fall Is The Optimal Time To Buy
As anticipated in previous Sunday Dock Reads, another rate drop is expected this Wednesday.
For those tracking mortgage rates this week, you may have noticed a notable decrease in fixed-rate mortgages. This includes reductions across four-year fixed (uninsured) and one, three, and four-year fixed (insured) terms. It seems that the three-year fixed term, once the preferred choice for 2024, is gradually yielding to the five-year term.
As rates continue to fall, we are beginning to see a shift towards five-year terms. It is anticipated that five-year fixed rates will soon be available in the 3% range, prompting borrowers to return to these longer terms.
As forecasted in previous Sunday Dock Reads, a 0.25% rate cut is expected this Wednesday, marking the third reduction in consecutive Bank of Canada announcements.
The timing is ideal for those who have been waiting on the sidelines for the post-Labour Day real estate surge. HuronMortgages.ca is ahead of the curve with a comprehensive lineup of lenders.
Explore our offerings to ensure you are well-prepared for the upcoming 60 days.
Digging Deeper
Ontario and British Columbia’s real estate markets are experiencing a significant influx of inventory. In Ontario, new listings surged by 15% year-over-year in July, with Toronto seeing an 18.5% increase. Mississauga and Ottawa have seen even more dramatic rises, with new listings up over 50% compared to last year.
British Columbia is witnessing a similar trend, with new listings up 12.8% year-over-year. Metro Vancouver, in particular, has seen a striking 39.1% increase, resulting in the highest inventory levels in over a decade.
This abundance of listings has led to a desirable outcome for prospective buyers: a reduction in prices. In July, the average selling price in British Columbia decreased by 0.49% to $962,537, while Ontario saw a 1.7% drop to $837,685.
With prices falling and concerns about affordability taking center stage, the increased supply across major markets makes this fall an excellent opportunity for buyers to re-engage with the market. An earlier survey revealed that 31.6% of potential buyers are waiting for substantial rate cuts, while 15.1% are anticipating just one more reduction before making a move.
New Buyers Appear Two Months Behind Current Market Status
The next generation of Ontarians largely views homeownership as a valuable long-term investment, yet more than half believe this aspiration is currently beyond their reach. A recent survey by Broker explored the homeownership dreams of Millennials across Canada.
While many feel that owning a home remains an elusive goal, a significant number still hope to transition from renting to owning. According to the survey, 84% of Canadians aged 18 to 38, born between 1986 and 2006, consider homeownership a worthwhile investment, and 74% view it as a lifetime priority.
However, high property prices, rising interest rates, and the escalating cost of living have rendered homeownership seemingly unattainable for many in Ontario. Among Ontario respondents, only 47% believe that owning a home is an achievable goal. Meanwhile, 27% consider it unachievable, and 26% remain uncertain.
Nationally, just over half (54%) of Canadians share the belief that homeownership is attainable, while 26% are unsure, and 20% feel it is entirely out of reach.
The survey also revealed that the next generation of aspiring homeowners is prepared to make significant financial sacrifices to turn their dreams into reality.
Nearly 50% of those planning to buy a home are diligently saving a portion of their income for a down payment and managing their loans and bills to maintain a strong credit rating. Additionally, 34% are cutting back on discretionary spending to bolster their savings, while 30% are minimizing rent expenses by living with family to accumulate funds for a down payment.
Although high home prices continue to pose a challenge for first-time buyers, the recent cooling of the real estate market over the summer has resulted in more homes selling below their asking prices in the Greater Toronto Area. In Mississauga, prices fell by 5.5% from June to July 2024, and Brampton experienced a notable decrease, with average sale prices dipping just above $1,010,000 in July. The Halton Region saw a 17.6% month-over-month decline in sales, with 543 homes sold in July.
For those seeking more affordable entry points into the housing market, certain communities in the GTA had median prices under $550,000 from January to June this year. The most affordable was Toronto’s East York neighborhood, where the median sold price was $485,000, with 63 transactions during the first half of the year.
Perhaps our previous Sunday Dock Read could be of assistance.
