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Home prices expected to climb 4.9% in 2024 as sales rise last month: CREA

The Canadian Real Estate Association says it's now expecting the national average home price to climb 4.9 per cent on an annual basis to $710,468, more than double the hike it had predicted at the start of 2024.

In its updated outlook for the year released Friday, CREA said it now expects 492,083 homes to trade hands this year, a 10.5 per cent increase from 2023.

In its January forecast, CREA had expected a 10.4 per cent increase in home sales this year and a 2.3 per cent rise in the average home price for 2024.

"If you look at last spring as a guide and add to that record population growth in the last year and a central bank that is far more likely to cut this summer than raise like it did last year, it could get interesting,” said CREA senior economist Shaun Cathcart in a press release.

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“Will the story be high interest rates keeping a lot of people on the sidelines this year, or the much expected and anticipated first rate cuts enticing a lot of people back into the market? Probably a bit of both."

The revised forecast came as CREA reported the number of home sales in March rose 1.7 per cent compared with a year ago. The average price of a home sold last month amounted to $698,530, up two per cent from March 2023.

On a month-over-month basis, CREA said home sales in March were up 0.5 per cent.

The number of newly listed homes declined by 1.6 per cent on a month-over-month basis in March.

Meanwhile, there were 3.8 months of inventory on a national basis at the end of March, unchanged from the end of February, but short of the long-term average of about five months of inventory.

Conrad Zurini, owner of Re/Max Escarpment Realty, said despite the Bank of Canada holding its key rate steady for the sixth consecutive time earlier this week, consumers are bracing for borrowing costs to come down.

"Consumers are thinking there's brighter skies ahead," said Zurini, who is based in Hamilton.

"That rate reduction, no matter when it comes this year, I think consumers are thinking it'll add fuel to the fire in terms of home prices and they've got to jump in now."

CREA chair Larry Cerqua noted that while home sales levels for March were "quite flat" on a month-over-month basis, anecdotal evidence from late last month and early April suggests activity is ramping up.

Zurini said he's seeing signs of that potential boom on the ground. According to in-house data at his firm, showings were up 25 per cent week-over-week to kick off the month of April.

"It's going to be, now, can we get the inventory to keep up with the demand?" he said.

He said an appreciation in the value of homes on the market as a result of higher demand could wipe out the savings of a modest interest rate cut when purchasing a home.

"There's an expression in the mortgage world: If you wait for the rate, it could be too late."

This report by The Canadian Press was first published April 12, 2024.

Sammy Hudes, The Canadian Press