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Real Estate : a rather slow start to the year, according to experts

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Although the prices of homes have fallen a bit from pandemic highs, the combination of high interest rates and buyers waiting for prices to fall further has created a slow sales market across most of the province, according to several data on the industry.

Radio-Canada

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In 2023, Ontario home sales hit 20-year lows. With nothing pointing to a significant drop in mortgage interest rates any time soon, experts predict the slow pace will continue into early 2024.

The general trend should be that stagnation continues, says Ron Butler, real estate broker at Butler Mortgage. Sellers haven't lowered their prices enough to offset buyers' increased borrowing costs, adds John Pasalis, president of Realosophy Realty.

Rishi Sondhi, economist at TD Bank, also forecasts that sales will remain rather low, although higher than in 2023.

We've hit rock bottom.

A quote from Rishi Sondhi, economist at TD Bank

However, there is no consensus as to the impact this will have on prices due to supply and demand which are expected to have contradictory effects, experts note. However, we note that high interest rates should lower demand, but that rapid population growth and the lack of new construction will push it up.

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The real estate firm, Royal LePage, forecasts a 6% increase in the average real estate price in the Greater Toronto Area by the end of 2024. Remax, for its part, forecasts an average decline of 3%.

Doug Ford's government announced in 2022 its objective of building 1.5 million housing units by 2031, but the annual construction rate necessary to achieve this has not yet been achieved. According to forecasts, the situation will not improve as developers find it difficult to finance projects due to high interest rates, rising costs of construction materials as well as labor shortages. work that continues to undermine the industry. Rishi Sondhi, however, does not expect a collapse, particularly given the expected growth in construction of rental housing supported by the exemption from the harmonized sales tax by governments for these projects.

According to provincial data, around thirty municipalities will not benefit from the financial incentive from the Ontario government to build more housing since they do not have not reached their objective in 2023.

According to John Pasalis, in the next year, several investors will sell their condominiums. As their mortgages are renewed, it will be more difficult to afford these condos, he points out.

At the end of November, the Toronto Region Real Estate Board reported approximately 23,000 condo sales in 2023, a drop of 44% compared to the same period in 2021. Sales would have seen a decrease of 47% in one year, according to a November report from research firm Urbanation.

With information from CBC

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