Housing predictions for 2024

A housing correction is taking place, and 2024 is sure to be a pivotal marker in what will become an even-stronger real estate market moving forward. The demand is only going to intensify with increased immigration, which also includes foreign students who may choose to live here once they’ve graduated. We ultimately benefit, but where is everyone going to live?

As of October 2023, the year-to-date completion of new highrise homes was 18,808 units, according to a report by The Altus Greater Toronto Area High Rise Projects. This number is expected to drop due to the lack of sales volume in the last two years. Pre-construction sales, alone, have dropped by 70 per cent, which directly correlates with the amount of new housing scheduled to be built.

While there’s been a government push to increase rental housing, the rents are out of reach for so many, leaving individuals and families in a serious predicament when trying to come up with a living alternative. Those who are able to are offering to pay months in advance in order to stay competitive, rather than the conventional requirement of paying the first and last months’ rent when signing a lease.

PAY ATTENTION TO THE NUMBERS

Savvy real estate investors tend to purchase real estate when the market is down. Playing the interest rate fluctuation game can be a bit of a gamble, but if you catch rates on the downswing, chances are you’ll be able to lock into a 10-year average on your mortgage at approximately four per cent.

We took a look at a detached home in Mississauga. The two scenarios will provide you with a better appreciation for how interest rates and price, are affected on this property.

Amortized over 30 years with a 20-per-cent down payment, this house was originally listed for $1.5 million before the interest rate increase. Paying full price, monthly mortgage payments for a five-year term at seven per cent would have been $7,903, at five per cent $6,404, and at four per cent $5,706.

After the interest rate increase, this home sold for $1.1 million. Again, with a 20-per-cent down payment, amortized over 30 years, monthly mortgage payments for a five-year fixed interest rate at seven per cent would be $5,796, at five per cent $4,696, and at four per cent $4,185.

As interest rates begin to decline, housing prices are expected to climb.

COMMON SENSE SOLUTIONS

There are practical and impactful steps that the government should take to help people through the current interest rate predicament.
Number one is to increase the amortization period to 40 years, so that homeowners can better afford to carry the costs for their home. While some may say that this a short-term solution, the reality is that mortgage payments have tripled in the last two years, and this step helps to protect people from losing their home.

Next, the government needs to escalate rezoning policies, so that those white-elephant homes in subdivisions can be repurposed to better service a larger population. Currently, Mississauga is tabling legislation to allow for a fourth dwelling on one property. Not only are these mega mansions unaffordable, but no wants to maintain them. Quality of life is far more important than the vastness of a floorplan. Any dwelling more than 4,000 sq. ft., that was built between 1980 and 2000, could be subdivided into duplexes or triplexes and the government should incentivize owners to convert their homes; whether it be adding a basement apartment or subdividing the home into a duplex, triplex or other design.

And, one of my personal favourites, is to repurpose empty office spaces. Since the pandemic, our work/life balance has changed. Vacant buildings are sitting on some of the hottest real estate in the city, and ought to be converted into condos or rental units.

We’re only limited by our imagination, and there are so many proactive opportunities. This year, 2024, is the time for a new outlook on life – and on housing.