As the long-awaited decline in interest rates begins to take shape, early insights from Re/Max brokers and agents nationwide suggest the fall’s housing market activity will be steady. According to Re/Max’s 2024 Fall Housing Market Outlook, average sale prices for all housing types are expected to increase between one and six per cent in most regions by the end of the year.

With the next Bank of Canada (BoC) interest rate announcement scheduled for September 4, many Canadians are watching closely. A recent Re/Max survey reveals that 16 per cent of Canadians would feel more comfortable entering the real estate market if the BoC implements a rate cut of more than 100 basis points by the end of the year.

“The fall market is usually a good early indicator for activity as we look ahead to early 2025, and we’re headed toward more healthy territory. With interest rates starting to ease, buyers are beginning to come off the sidelines,” says Christopher Alexander, president, Re/Max Canada. 

However, Alexander notes that while the market is showing signs of life, it won’t necessarily return to historical activity levels without a more substantial move from the Bank of Canada.

Consumer confidence on the rise with remaining challenges

As anticipation builds around further potential interest rate cuts, first-time homebuyer confidence is notably increasing. The survey found that 25 per cent of Canadians are actively saving for a home and believe they will soon be able to purchase, with the most optimism seen among younger Millennials and Gen Zs aged 18-24 (35 per cent).

On the other hand, some current homeowners may find that the rate cuts come too late. 14 per cent of homeowners facing mortgage renewal at higher rates are considering selling their homes due to affordability challenges.

Financial priorities for many Canadians remain focused on day-to-day expenses, such as utilities and food (58 per cent), and travel (45 per cent), with home purchases ranking among the top three priorities for 25 per cent of respondents. Meanwhile, affordability concerns are prompting 28 per cent of Canadians to consider relocating to another country, and 25 per cent are reconsidering starting a family.

Affordability and supply remain key concerns

“Despite some consumer confidence starting to return to the market this season, the reality is Canadians are still grappling with some serious housing affordability challenges rooted in lack of supply. Yes, borrowing is becoming less expensive, but this won’t make housing affordable in the long run,” says Alexander.

As more buyers re-enter the market and available inventory is absorbed, Alexander warns of potential upward pressure on prices. He stresses the need for a comprehensive national housing strategy developed collaboratively by all levels of government to address supply shortages strategically.

“In the meantime, buyers would be wise to work with an experienced real estate agent to help navigate those cyclical market ups and downs that often accompany this push and pull of supply and demand.”

Review the full report, including regional insights.

Despite gaining momentum in June, after the Bank of Canada’s rate cut that month, activity in Canada’s housing market paused in July.

Last month, home sales dipped 0.7 per cent on a month-over-month basis, reversing a small portion of June’s post-first rate cut gains. There’s a likelihood of further rate cuts in the next interest rate decision with the pace of future policy likely easing.

Expectations of further policy easing and more rate cuts to come

It’s clear that we may take a while to return to the COVID era when home sales peaked in January 2021 — their highest peak since January 2009, reaching approximately 64,000 sales. Despite the 0.7 per cent drop in sales, there’s a positive side to this as sales remain close to the recorded level from June.

But after the Bank of Canada announced a second rate cut of 4.5 per cent on July 24, there have been growing expectations of further policy easing with markets anticipating additional cuts as we head into fall.

It’s good news that despite the slight dip in July, our actual monthly activity was still 4.8 per cent higher than in July 2023. As well, the number of newly listed properties increased by 0.9 per cent month-over-month with Calgary seeing a notable boost in supply.

The Home Price Index rose by 0.2 per cent from June to July, although prices remained 3.9 per cent lower than in June 2023. The national average sale price was virtually unchanged — dipping just 0.2 per cent year-over-year to $1,667,317.

A balanced market with potential for continued downward price pressure — fall will be oversupplied

Canada’s market is pretty much balanced at this point, steadily at just over four months of inventory and just over 50 per cent sales-to-new-listing ratios. This can result in continued downward pressure on prices.

All of this is correlated to the fact that national new listings inventory continued to climb in July, which is typically considered one of the slowest periods for new listings. Looking ahead into fall, there will be an oversupplied market.

Alberta and Ontario: Stabilized

The biggest price increase was observed in Edmonton and Hamilton-Burlington, whereas Calgary and Toronto both witnessed the largest average price increase, which levelled one another out. This has resulted in Alberta and Ontario stabilizing in terms of the provincial average home sales price trend over the last several months.

Interestingly enough, despite having the biggest decrease in average price, Calgary had the most number of properties listed, which contributed to the increase of 0.9 per cent of the national average. 

Source: Wowa.ca

Keeping an eye on these developments will be critical for understanding what’s in store for the industry this fall and beyond, and for helping us advise our clients well.

Renting in Canada today can be challenging, but some cities are making it easier with a perfect blend of affordability, quality of life and community. Point2 identified the best cities for renters by analyzing 24 metrics across these areas, ranking Canada’s 100 largest cities.

These cities offer the best of all worlds for renters

In these top-ranking cities, renters can enjoy a well-balanced lifestyle without feeling like they’re in limbo until they can buy a home. Seven cities in Quebec and Cape Breton, Nova Scotia, boast the lowest average rents, all under $1,000, making them ideal for those seeking affordability.

Meanwhile, cities like Toronto, Oakville and Montreal have the largest inventories of rental homes, offering plenty of options, while the highest number of new rental unit starts are found in North Vancouver, B.C.

St. John’s, Newfoundland emerges as a standout city, striking the right balance between economic opportunity and vibrant community life. Cities in Quebec dominate the rankings, with Sherbrooke, Quebec City and others offering the most satisfying renter lifestyles, where tenants thrive rather than just making do.

Economy & housing hotspots: Quebec renters for the win

In terms of economic and housing conditions, 18 out of 19 Quebec cities lead the pack, highlighting their exceptional quality of life for renters.

Wood Buffalo, Alberta, also shines as an affordability haven, where nearly 83 per cent of renters spend less than 30 per cent of their income on housing costs.

Best spots for quality of life: Quebec & Ontario

Quality of life is crucial for renters, and factors like safety, walkability and access to green spaces make British Columbia and Ontario stand out. Vancouver and North Vancouver are praised for their walkability, while Caledon, Ont., boasts the highest greenness score.

The least stressed renters are found where life feels the most comfortable: St. John’s, Saskatoon and Oshawa.

Connecting to community: Victoria, B.C. takes first place

Community connections are vital, and Victoria, B.C., leads in this category with high scores for access to restaurants, museums and educational opportunities. Each province has cities that excel in building a strong sense of community, proving that renters can find a fulfilling lifestyle across Canada.

Review the full report here.

25 per cent. 

That’s the percentage of mortgage applications that Perch, a mortgage brokerage based in Toronto, receives from prospective homeowners who are single. That means about three-quarters of their applicants are coupled up, in some form or another. 

“People have to aggregate to survive”, shares Alex Leduc, founder and CEO of Perch. “Whether it’s intergenerational living, couples, siblings, and so on, there are so many trends towards needing to pool multiple incomes or down payment sources to make ends meet to get into the housing market.”

Qualifying separately for first-time homebuyer incentives

Michael Son, a realtor since 2022 with G&E Realty Group, previously lived and worked in Montreal before moving to Vancouver. He’s seen first-hand how people’s romantic choices influence their real estate transactions.

A client of his in Ontario recently had a wedding ceremony, but didn’t sign on the dotted line … yet. 

“They’re going to sign the papers a bit later down the line so that they can apply for their first-time homebuyer credits and incentives separately, so that they can even pull property together,” Son explains.

Why wait? One of them had already previously purchased a property and used the First-Time Home Buyers’ Tax Credit and incentives. Therefore, if they “officially” married, the other wouldn’t have been able to use the credit themselves. 

“They’ve recently moved into a very large townhouse, so they’ll have to wait a little longer before they certify their marriage,” Son adds.

How cultural values around relationships align with real estate transaction practicalities

A study by The Vanier Institute of The Family showed that common-law unions are most common in Quebec and Nunavut. Being French-Canadian with Korean ethnicity, Son has experience with how different cultural values around relationships align with the practicalities of real estate transactions.

“We see a lot of common-law partnerships and based on my experience so far, the majority of my clients like to keep a lot of things separate from their spouse,” comments Son.

For better or for worse, many societal conventions tend to operate in favour of couples, such as hotel room bookings with double occupancy. Homeownership in Canada appears to be no exception. Two people tend to equal two incomes, especially in more urban areas of the country, based on Perch’s data.

“If I have two people making $100,000 per year each or one person making $200,000 a year, lenders will look at it very similarly,” says Leduc. “I think it’s more around the continuation of that mortgage, or the ability to not go into default.”

Buyers need to stand out: Personal touches can pay off

Mortgage brokers might not be the only ones swayed by someone’s relationship status when it comes to buying a home. When Tania Perizzolo and her fiance, Nick Raposo, a couple in their 30s from Metro Vancouver, bought their home together, it was during a highly competitive market.

“Buying a home together was exciting and stressful. Exciting because our relationship was fresh with the promise of the future, having recently moved in together,” Perizzolo recalls. 

When they did eventually find a home they loved, she knew that they’d have to stand out if they wanted to land that dream home.

“To add a personal touch to our offer, we decided to submit a short letter to the seller,” she continues. “To be honest, it felt uncomfortable to be so vulnerable with a stranger, but with such a large and meaningful purchase on the line we got over that discomfort pretty quickly. ”

The letter included a photo of the couple with their love story, what they hoped for the future and how that particular home would fit that vision. Fortunately, it paid off, as it was a contributing factor in the seller’s decision to choose them as the new owners.

Decision of where to put down roots: Partly influenced by real estate market dynamics 

Perch’s data indicates that of clients ages 18 to 39 who closed a mortgage with them, 65 per cent were married or common law. Rosa Sasages, a homeowner based in Chilliwack (a Metro Vancouver suburb), and her husband Sean got married when they were 22. By the time they were 28, they were able to put a down payment on their first home together. But it wasn’t exactly a honeymoon phase going into homeownership.

“We got married without any savings or anything to even think about buying,” she shares. “During that first year of marriage in 2009, we were very much affected by the recession that trickled into our honeymoon phase of life.”

The decision of where to put down roots was in part influenced by the dynamics of the real estate market. While they were initially concerned about leaving the city behind for a quieter lifestyle in Chilliwack, it’s a decision they don’t regret.

“We thought we would hate it here. Too quiet. Too lonely,” Sasages confesses. “Buying real estate is a gamble. It’s a gamble on what price you pay, where you buy and what you gain. But we love it here. It takes courage, hard work and, in some cases, timing to succeed in this market.”

Divorce: The ‘leading cause of unexpected defaults or homes that must liquidate’

Despite divorce rates declining in Canada since the 1990s, it’s not always a happy ending for everyone.

“I remember one of my old bosses would always joke, ‘If somebody could just build a divorce prediction model it would trump any other one,’ because that’s the leading cause of unexpected defaults or homes that have to go into liquidation,” Leduc adds.

So, if your clients are a couple looking to jump into a different kind of long-term commitment with homeownership, what can they do to ensure success both in real estate and in their relationship?

“It’s just all about planning, period,” shares Son. “Budget realistically and (get) some professional guidance from mortgage brokers or real estate brokers. Have a long-term forecast and plan for the future a little bit more compared to the immediate now.”

Unprecedented population growth is dramatically changing Canada’s conventional and luxury real estate market, according to Sotheby’s International Realty Canada’s Top-Tier Real Estate: 2024 Mid-Year State of Luxury Report.

Statistics Canada data reveals that all major Census Metropolitan Areas (CMAs) experienced their fastest growth since 2001-2002 in the year ending July 1, 2023. Calgary led with a 5.9 per cent growth rate, followed by Edmonton and Vancouver at 4.1 per cent, Toronto at 3.3 per cent and Montreal at 2.9 per cent.

Interprovincial & interregional migration: Key indicators of local economic confidence & consumer sentiment

Experts from Sotheby’s note that interprovincial and interregional migration trends are key indicators of local economic confidence and consumer sentiment, influencing both conventional and luxury housing markets.

The Vancouver CMA experienced its largest net loss to interprovincial migration in over 20 years, losing 4,795 people, and all Ontario CMAs, including Toronto, saw net losses in interprovincial migration. Alberta surpassed British Columbia in net interprovincial migration gains, with Calgary leading the CMAs, gaining 26,662 people. Toronto, Montreal and Vancouver continued to see significant net losses to regional migration.

Performance by city

Toronto’s luxury real estate market, supported by a population gain of 221,588 people, beat economic challenges to maintain steady activity in the first half of 2024. Despite higher interest rates, economic uncertainty and housing taxes and regulations, the GTA saw a modest 8.0 per cent year-over-year increase in residential real estate sales of over $4 million. However, sales over $1 million fell by 10 per cent. Within the City of Toronto, $4 million-plus sales rose by 4.0 per cent, but sales over $1 million dropped by 7 per cent.

Calgary’s real estate market reached new heights in the first half of 2024, driven by immigration and record inter-provincial migration. With a 6 per cent population surge and an influx of 95,784 people, competition for limited listings intensified, resulting in a 46 per cent year-over-year increase in high-end residential sales of over $1 million. Sales of homes over $4 million saw a 75 per cent annual gain.

Montreal’s luxury market remained balanced in the first half of 2024, with $4 million-plus residential sales up 29 per cent and $1 million-plus sales rising 25 per cent year-over-year. Homebuyers and investors took their time navigating the market, extending home searches and negotiations.

In contrast, Vancouver’s luxury market activity dropped. From January to June, luxury residential sales over $4 million fell by 16 per cent, and sales of ultra-luxury properties over $10 million dropped by 50 per cent. Despite a 27 per cent gain in $4 million-plus condominium sales, demand for luxury condominiums remained soft. The net loss of 18,399 people from the Vancouver CMA to other regions of B.C. dampened demand for housing.

Migration from larger to smaller communities foreshadows trends in sales, prices & market performance

“While record-setting population gains in Canada’s largest metropolitan areas continue to be powerful influences on the local real estate market, interprovincial and interregional migration patterns are now leading signals for local economic sentiment, core housing demand and conventional and luxury real estate market performance overall,” says Don Kottick, president and CEO, Sotheby’s International Realty Canada.

“The migration of residents and their talent and financial capital away from cities like Toronto and Vancouver to communities in surrounding regions or to provinces such as Alberta foreshadow trends in sales activity, housing prices and real estate market performance. This applies to the cities they are leaving and the markets they are moving to, and it applies across the conventional and luxury markets.”

Kottick notes that elevated prices and interest rates continue to impact consumer decisions, leading to steady but subdued activity in most major metropolitan luxury real estate markets. However, Alberta’s major cities are outperforming due to record-setting population gains, increasing both conventional and luxury sales to new levels during the first half of the year.

Review the full report here.

The Bank of Canada (BoC) lowered its benchmark rate for the second time in two months on July 24. With government bond yields also dropping, current mortgage rates have hit their lowest point in 17 months. Though some expect these lower rates to stimulate the real estate market, history suggests a different story.

WOWA Leads analyzed mortgage payments versus income over the last 50 years in Canada to explore the relationship between home prices and falling mortgage rates from their peaks. Findings show that mortgage payments for a recently purchased average property in Canada consume nearly all of the average person’s disposable income.

Currently, housing markets in Toronto and Vancouver are stagnant, whereas more affordable markets like Montreal, Calgary and Edmonton are thriving. For instance, in Toronto, the sales-to-new-listing ratio is at 35 per cent, indicating a buyer’s market, with inventory levels close to 25,000, the highest since 2010.

We’ve only seen this level of housing unaffordability twice before: around 1981 and 1990, with peaks in 1995 and 2007. Here’s what happened during those times.

Q3 1981 to Q3 1983

The BoC rate reached a high of 20.78 per cent in August 1981 before falling to 9.26 per cent in July 1983. Despite this significant rate drop, the home price index declined by 14 per cent while inflation rose by 17 per cent. In Vancouver, for instance, home prices dropped by nearly 40 per cent from early 1981 to mid-1982.

Q2 1990 to Q1 1994

The BoC rate dropped from 13.5 per cent to 3.6 per cent, but home prices fell by 8 per cent while inflation rose by 10 per cent. In the GTA, for example, home prices dropped by 28 per cent from April 1989 to August 1993.

Q1 1995 to Q4 1996

During this period, unaffordability peaked again, though less severely than before and today. The BoC rate fell from 8.2 per cent in March 1995 to 3 per cent in November 1996, but home prices declined by 4.5 per cent and inflation rose by 3 per cent. For example, Vancouver home prices dropped by 17 per cent from August 1994 to October 1998.

2007-2008 global financial crisis

In 2007, we again saw an unaffordability peak. From Q2 2008 to Q1 2009, home prices dropped by 9 per cent while the BoC rate fell from 4.25 per cent to 0.25 per cent. In 2009, home prices rebounded quickly.

Why home prices drop when affordability improves

As affordability improves, home prices can likely drop because of the lag effect of rate hikes and subsequent economic deterioration.

Most Canadian mortgages are fixed-rate, so the impact of rate hikes is felt mainly during renewals, often after rates have peaked. This can pressure some sellers to offload properties.

A BoC rate cut usually signals dropping inflation caused by a slowing economy, higher unemployment and lower earnings for the self-employed. Decreasing home prices are strongly impacted by higher unemployment.

What’s next for Canada’s housing market?

The housing market is currently performing differently nationwide. For example, Ontario home prices have declined recently, while Quebec and Alberta are seeing steady growth. Historically, unaffordability tends to lead to price drops after the rate peak.

So, while the full impact of high interest rates on the market has yet to play out, we might see price moderation in Ontario, especially the GTA, while Alberta and Quebec could remain relatively stable.

There’s speculation that Canada’s housing market is headed in a direction that will land us in a foul-up similar to much of Europe, with housing prices so out of reach that many people will never be able to afford a home unless they inherit one.

In a country like ours, recognized globally for its opportunities, this harsh forecast comes as a shock. But experts aren’t denying that it’s a possibility.

The housing supply crisis’ magnitude

“It’s a valid question,” says Kevin Hughes, deputy chief economist with the Canada Mortgage and Housing Corporation (CMHC). “Housing affordability and the housing crisis have been in the news for several years now.”

To get an idea of the magnitude of the housing supply crisis, CMHC recently updated its Supply Gaps Estimate report in hopes of determining how many housing units beyond current trends would need to be built between now and 2030 to restore affordability. The number CMHC came up with is 3.5 million.

“That’s a lot,” Hughes stresses. “I’m not saying it’s a realistic goal. But it’s what we’re looking at.”

It would in fact be an unprecedented boost in construction, which would come at what many consider an unacceptable societal cost, majorly stressing the system and creating countless spin-off issues around infrastructure, traffic and the environment.  “We can’t look at housing in isolation of these other factors,” Hughes asserts.   

What’s realistic?

Reading between the lines, such an extreme level of supply may very well not be achievable, despite ongoing government initiatives at all levels, including the recent federal budget, which lays out a plan to unlock 3.87 million new homes by 2031. 

According to the CMHC report, Ontario and British Columbia continue to be Canada’s least affordable housing markets, with the lion’s share of the housing supply gap. As financial pressure mounts for Canadian households in large centres battling high prices and insufficient supply, “more people get priced out and move elsewhere,” notes Hughes.

Increased population density is another path forward for cities in this situation, he explains. 

“There are roughly 4,000 people per square kilometre in Montreal, and Toronto is about the same. That can go up to 7,000 and above in some centres in Europe. The starkest comparison is Paris, where there are 20,000 people per square kilometre.”

Yowza. No wonder France is experiencing a major lack of housing supply.

Similar trends around the globe

In cities worldwide with similar issues around population and housing shortages, experts have observed that there tend to be:

• greater numbers of compact housing units being built,
• more focus on public transit over cars in the downtown core,
• increased cohabitation and communal living,
• more people commuting greater distances,
• a significant percentage of young people living at home who’d normally have moved out and
• mortgages being held for longer periods, even well past retirement.

All of these things are happening to some extent in Toronto, Vancouver and Canada’s other large, busy cities.

“We’re already seeing density increasing,” Hughes affirms.

Many possible future paths — including those like Europe’s

The True-North-strong-and-free is shifting to a new normal. Take the example of commuting. “Before, no one would travel an hour to get to work. Now no one gives it a second thought,” Hughes points out. “What people think of as ‘normal’ changes. When we think we’ve reached the limit, we realize we haven’t.” 

He continues: “The future in Canada will likely be a mixture. We’ll see more supply, more density and more people moving elsewhere. The variables aren’t mutually exclusive. It’s never all or nothing. It could go many ways with many variables. Nothing is inevitable and none of this will happen overnight. There are many possible paths.”

So yes, it seems that watching our housing market become more like Europe’s may be among these. 

“I’ve heard that,” confirms Valerie Dooley, a sales rep with Forest Hill Real Estate in Toronto who’s lived in Europe. “Multigenerational living is common in countries like Italy,“ she adds. “I think we’re starting to move more in the same direction.”

Another outlook

Despite perceptions to the contrary, Re/Max Canada president Christopher Alexander states that homeownership rates throughout much of Europe remain high, “upwards of 70 per cent in places like Malta, Estonia, Hungary and more.” (At the time of the last census in 2021, Canada’s homeownership rate sat slightly beneath that, at 66.5 per cent — a 20-year low.) 

Alexander insists that Canada still has a lot of affordable markets. “Many people tend to make affordability comparisons to our most expensive and sought-after cities when it’s not realistic for first-time homebuyers to expect to buy their dream homes at their first purchase,” he points out.

The best advice he can give homeowners, he says, is to get into the market within their means and start building equity. “That’s a surefire way to be able to eventually afford the home you want in the city you want.”

And in case of any lingering doubt, Alexander asserts that real estate in Canada continues to be a good investment.

“Canada is aggressively trying to build more homes and create greater affordability. I’m confident that homeownership will be in reach for most people for years to come.”

In Canada, conversations about the housing market often centre around price, which is a key determinant for many buyer decisions. Many households have trouble getting into the market, considering the national average home price was $696,179 in June.

That being said, finding the right place to live involves more than just cost. It’s essential your clients consider factors that contribute to overall well-being, such as job opportunities, commute times and community amenities. Zolo considered these things along with other factors in its recent report on Canada’s best places to live. Here are the key findings.

Most livable cities

Source: Zolo

Ottawa tops the list, known for its affordability, low crime rates and high household incomes. Other notable cities include the Simcoe area, Guelph, Barrie, Tillsonburg, Kitchener–Waterloo, Saskatoon, Edmonton, Halifax–Dartmouth and Winnipeg.

These cities blend affordability with amenities that enhance quality of life, making them ideal for various demographics.

Family-friendly cities

These cities feature some combination of communities with a high proportion of other families, low crime rates and affordable housing, along with high household income, low unemployment and access to recreation and primary healthcare providers.

Ontario leads in family-friendly cities, including the cities of Barrie, Ottawa, Simcoe area, Guelph, Kitchener–Waterloo, the GTA, Mississauga and Hamilton–Burlington. Outside Ontario, Calgary and Saint John offer excellent environments for families.

Best places for young adults

For young adults, cities with universities and good public transportation and walkability rank high, such as Saskatoon, Winnipeg, Edmonton, Guelph, Sudbury, Kitchener–Waterloo, Ottawa, Halifax–Dartmouth, Victoria and Greater Vancouver.

These cities offer affordability, job opportunities and vibrant communities that attract young professionals. In more expensive larger centres, many young adults are creatively entering the market by purchasing with friends or using money from family.

Ideal spots for retirees

Many retirees are choosing to age where they are, but those looking to downsize value safety, affordability, access to medical facilities and a community of other seniors. The top locations for them include Saint John, Fredericton, Ottawa, Grey Bruce Owen Sound, Niagara Region, Simcoe area, Central Lakes and Sault Ste. Marie.

Best for nature lovers

Nature lovers should look at smaller, less-dense towns, outdoor activities, favourable climate and weather and parks and green spaces. Top areas include Ottawa, Simcoe, Barrie, Grey Bruce Owen Sound, Bancroft area, Kawartha Lakes, Guelph, Saskatoon, Winnipeg and Edmonton.

Review the full report in detail here.

Engel & Völkers recently released its 2024 Mid-Year Luxury Real Estate Market Report, highlighting that luxury properties in Halifax, Ottawa, Toronto and Vancouver are outperforming market trends in the $1 million-plus market segment.

The report addresses misconceptions about “Canada’s foreign buyer ban,” which the company says has affected the country’s image and disrupted condominium market dynamics, especially in new construction. It also reveals that the market is experiencing a decline in domestic investor activity, with sluggish condominium sales as buyers await relief from higher interest rates.

“Canada’s luxury real estate markets are demonstrating impressive resilience despite the slowdown in overall sales. While interest rates impact the conventional market, particularly first-time buyers, luxury buyers often pay in cash and are therefore less affected,” says Anthony Hitt, president and CEO of Engel & Völkers Americas.

“We anticipate that Canada’s luxury markets will remain stable as real estate continues to be an appealing and safe investment.”

Key national trends

Luxury home sales go against the grain

Sales of detached luxury homes are growing strong in major Canadian cities, defying overall market trends. Rising interest rates have a limited impact on the luxury market, as many buyers pay in cash.

For example, from January to June, Toronto saw a 4.73 per cent increase in prices for homes over $8 million compared to last year. In the first half of this year, Halifax reported a five per cent increase in sales for homes over $1 million. In the same period, Ottawa’s home prices grew by eight per cent for properties between $1 million and $1.99 million, and Vancouver saw a 4.7 per cent increase in the average sale price for homes between $2 million and $3.99 million despite more listings and fewer sales.

Decline in domestic investors

Homes are now mainly being bought and sold for standard reasons like relocating, upsizing and downsizing.

Most domestic investors have left the market due to decreased incentives and higher interest rates. The report notes that in fall 2023, the Bank of Canada indicated 30 per cent of residential home purchases in early 2023 were made by investors, down from under 20 per cent in 2014.

Sluggish condominium sales

Condominiums, which are normally entry-level homes for first-time buyers, are experiencing slow sales as buyers wait for interest rate relief. This lack of competition means buyers who would usually purchase condominiums are now competing for houses. Engel & Völkers predicts that intense competition for residential properties will eventually push buyers back to condominiums.

Millennials, now focused on building families and careers, find one-plus bedroom units insufficient. Likewise, Baby Boomers, who would normally downsize to condominiums, prefer to stay where they are due to the high prices and inadequate size of current condominium inventory.

Review the full report, including regional highlights and property spotlights, here.

The real estate industry in Canada is adapting to a new and growing trend in the marketplace: multigenerational living. More and more Canadian families are seeking creative housing solutions in light of today’s affordability challenges.

Tim Syrianos, owner of Re/Max Ultimate Realty based in downtown Toronto, says the trend is evident in his market and will continue to impact the real estate industry in the coming years.

“Affordability, or the lack thereof, has definitely driven the consideration for multigenerational living. We are seeing it in neighbourhoods where you haven’t seen it before,” he explains. “You’re seeing types of homes that were single-family being topped up and having the lower level completed, and now you have two to three units where families are able to live together.”

Multi-unit homes with unconventional layouts

A trend he also notes is larger homes in more luxurious neighbourhoods being built to include more than one unit — in some cases, as many as three.

“Based on the cost of housing today, this is something that is definitely going to be considered by many families. There’s been conversation in the past about the bank of mom and dad helping kids — maybe the bank of mom and dad will not help them buy another home but instead, renovate an existing home that allows them to be together. This way, it helps (both) the parents as they’re aging and the younger generations as well.”

Syrianos points out that people looking at these properties might not realize they’re multigenerational homes. Instead of having the traditional single door in front of the home, there are perhaps two double doors side by side with a bay window. One door could go straight upstairs while the other door goes to the main floor and lower level.

He says builders are starting to build homes with this in mind. “Builders are being contracted specifically for it. They’re not really going to market and build them as common. They’re being contracted for that for the most part at this point,” adds Syrianos. 

“There are builders that I know and I have personally spoken to that are specifically building those types of opportunities for people, but not in the luxury market as much as we’ll say the ‘missing middle’ market.”

Not enough homes for multigenerational living: Finding solutions

Richard Mariani, sales and marketing manager for CountryWide Homes, says there are not enough homes being designed properly for multigenerational living, since much of the land isn’t conducive for that particular layout.

“But it’s something we felt the market had been requesting and the feedback from our sales team was that we had a lot of buyers coming here and looking to upgrade their house to a larger one. Maybe their in-laws or their parents are getting older, they have an older house (and they) sell both of their houses and buy one from us. We allow them to do that with certain options,” says Mariani.

Recently, the builder broke ground on Sora Vista, a new community in Vaughan, which addresses some of the housing challenges and encourages multigenerational living with fully customizable floor plans.

‘We have to think differently and the buyer has to think differently to come up with solutions’

The multigenerational living trend is happening because of challenges in today’s market with elevated interest rates of recent years. This puts constraints on what people can afford. “We have to think differently and the buyer has to think differently to come up with solutions,” Mariani points out.

For example, homes are built with higher ceilings, allowing buyers to acquire more square footage and the potential to finish the basement to accommodate multigenerational living. Side-door entrances and separate staircases from the mud room off the garage or the side entrance of the house go right into the basement.

“We try to explain and illustrate to these buyers that we’re not just selling houses. This is an asset that’s so valuable to everyone. Everyone needs somewhere to live. You can put two families together, make it economically feasible and have some extra income generated. We’re trying to make everyone win here,” adds Mariani.

He explains that costs aren’t changing — they’re still high, whether for materials or labour — so they’re constantly thinking of innovative ways to give people shelter and be creative.

“That’s how a lot of immigrants start in this country: they live together. It’s nothing new that we’re talking about. People have been coming to this country, they live with family or friends until they can save up enough money, they all work and they all get jobs. We try to give people opportunity in this country no matter where they’re coming from … We want to provide shelter for them and make it affordable in the best way possible by coming up with these new creative building solutions.”

49% of those living with co-owners bought together because they couldn’t afford to on their own

Karen Yolevski, COO of Royal LePage Real Estate Services Ltd., notes the company did a co-owner survey in 2023 which shows that multigenerational households are now the fastest-growing household type in Canada.

“This trend is growing,” she says.

The survey found that 56 per cent of co-owners own a home with their parents or their parents-in-law, while 18 per cent co-own with their adult children. This doesn’t mean they’re all living together — in some cases, it’s for financial support. 

Yolevski says the survey indicated that, of those who live with their co-owner(s), 49 per cent purchased with another party because they would not have been able to afford to on their own. “Especially in Canada, we’ve always seen some multigenerational living. (It’s) very common, particularly in some cultures to have multigenerational living,” she points out.

“Because of the price of houses and the difficulties that particularly first-time buyers are having getting into the market — because it’s very difficult to save up the down payment and purchase prices are so high, (and) it can be difficult to qualify for the mortgage as well — we’re going to continue to see people make this decision based on financial reason. So, finances will be the driver behind multigenerational living.”

Yolevski also feels there will be different formats of the co-owner living arrangement. “We’re not just going to see parents and children living together, but we’ll see more instances of friends investing in a property together, we’ll see more instances of siblings investing in a property together. Different household formation patterns will come out of this.”