Yahoo Finance Homebuyers to seek out houses with rental potential to offset soaring mortgage costs
Homebuyers will prioritize primary residences with rental opportunities to mitigate mortgage costs and enhance potential investment returns as uncertainty about interest rates and high housing prices continue to be themes in 2024, a major real estate group predicts.
Re/Max Canada’s Housing Market Outlook Report forecasts that the national average residential price will increase by 0.5 per cent next year. Sixty-one per cent of areas will see average residential sale prices rise between two and 7.5 per cent, while 18 per cent of markets are expected to experience a decrease ranging from two to five per cent. Prices will remain stable in another 18 per cent of the country.
A Leger survey, commissioned by Re/Max, indicates that 73 per cent of respondents are confident that home ownership is the best investment, a sentiment that remains unchanged year over year. However, the organization’s brokers and agents predict that homebuyers will favour primary residences that include some kind of rental potential.
“This strategy, aimed at maximizing investment returns and countering rising living costs and mortgage payments, is anticipated to be a key influence in the 2024 housing market,” the report said.
According to Re/Max, the property types in focus are duplexes, triplexes and single-family homes equipped with secondary suites. However, more than half of respondents, expressed concerns that they may not be able to enter the market at all.
“Fifty-four per cent are concerned that interest rate increases will impact their ability to engage in the real estate market,” the report said. “This will impact millennial homebuyers most acutely, with 73 per cent agreeing.”
Christopher Alexander, president of Re/Max Canada, said that while 2023 has been challenging, real estate has historically provided good returns and financial stability. The market’s sluggish end to the year may also be setting up better things ahead, he said.
“The slower market we’ve been experiencing across the country this fall could be an early indicator of an active 2024, as reflected in the modest price increase and sales outlook for next year, and the balancing of conditions in several regions across the country.”
The slower market we’ve been experiencing across the country this fall could be an early indicator of an active 2024
Christopher Alexander, president, Re/Max Canada
According to the report, Western Canada will see ongoing challenges from interest rates and low inventory levels in 2024.
That will make things difficult for first-time homebuyers in cities such as Edmonton, Nanaimo and Saskatoon. Vancouver is likely to see a more balanced market.
In Ontario, average price fluctuations will vary by region, with prices in the GTA projected to decline by three per cent. Projections for the rest of the province range from a price decline of eight per cent for Kitchener-Waterloo to increases of seven per cent in Windsor and Sault Ste. Marie.
Meanwhile, Montreal might trend toward a buyer’s market, contingent on interest rates, the report said.
In Atlantic Canada, most regions expect a modest rise in average residential sale prices, with the highest increase in Moncton. Presently, all markets are seller’s markets, a trend likely to continue into 2024, except for St. John’s, which is expected to move toward a balanced market.
Re/Max said the Leger survey involved 1,516 Canadians and was carried out between Sept. 29 and Oct. 1, 2023. The survey has a +/- 2.5 per cent margin of error, 19 times out of 20, comparable to a similar-sized probability sample.
• Email: shcampbell@postmedia.com
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