Fall Real Estate Outlook: Trends, Insights & Opportunities

I hope you all had a wonderful and relaxing summer! As we transition into fall, I wanted to take a moment to recap the real estate market over the past few months and provide you some insights on what we can expect as we head into the new season. This summer was certainly an unusual one, with market conditions shifting in ways we didn’t anticipate, but it’s important to stay informed as we move forward. In this newsletter, I’ll break down the key trends we saw this summer and share some predictions on what’s ahead for the fall market.

Summer Recap

Typically, the summer market is steady with moderate sales, but this year saw a significant drop in activity. This shift seemed to stem from buyer caution as many waited for better market conditions, including increased inventory, price reductions, and interest rate cuts. Despite the headline news being the rise in inventory and the beginning of interest rate drops, buyers remained hesitant to make moves. We experienced the highest inventory levels in years, offering buyers a wide range of choices, but the consensus was to adopt a “wait and see” approach. Prices have stabilized, and the market is tipping in favor of buyers as we enter fall. Many sellers are coming to terms with the likelihood of price reductions, and there’s growing pressure on some homeowners to sell, particularly with mortgage renewals approaching. This pressure is expected to continue, especially for those who locked in historically low rates and will face higher renewal rates in the coming year.

Fall Outlook

As we move into fall, the headline news is that we’ve seen three rate cuts from the Bank of Canada! This marks a turning point as we finally begin to emerge from the inflationary pressures that have plagued the economy. This is great news for buyers, as there’s a lot of pent-up demand I’ve seen on the ground—buyers have just been waiting for the right time to re-enter the market. Additionally, recent changes in federal and provincial regulations aimed at “helping” homebuyers have significantly reduced the number of investors in the residential market. The silver lining here is that end users, those looking to live in their homes, are now facing less competition and are primarily competing with other homeowners, not investors. With homes sitting on the market longer, buyers have more time to do their due diligence and make fair offers, and perhaps even score a great deal! The outlook is definitely improving for buyers this season.

Mortgage Rates And How It Affects YOU

For every $100,000 borrowed, a 0.25% decrease in the interest rate would save you approximately $14.47 per month on your mortgage payments.

Example Scenario:

500,000 Mortgage, 25-Year Amortization, With a 5-Year Term

The difference in your monthly payments from the beginning of the year to now could mean significant savings. At the start of the year, with a 5% interest rate, your monthly payment would have been approximately $2,908.02. Now, with the interest rate at 4.25%, your monthly payment would drop to around $2,708.69. That’s a monthly savings of about $199.33, which adds up to a total savings of $11,959.80 over the 5-year term.

Potential Rate Drop Ahead: What to Expect

Things to watch out for: Interest rates could drop more rapidly than anticipated in 2025 if the Canadian economy stalls and faces headwinds toward a recession. According to economists, rates could be cut by 0.50%, potentially reaching the 2% range by late next year.