ARE PRICES GOING TO GO UP THIS YEAR?
Whether you own a home in St.Catharines, Niagara Falls or Fort Erie, you are probably asking or hearing that same question.
“I heard from a few people that home prices are going to go up in 2024. What do you think will happen?”
“I saw a post on Facebook saying that home prices are going to go up this year!”
The reason for asking that question is understandable. Afterall, for most people, a lot of their wealth is wrapped up in their home.
Forecasting a real estate market is kind of like speculating as to how the Toronto Blue Jays baseball team will do this year. You look at the players, coaching staff, their competition, trends and statistics and then make a forecast.
Back to real estate, how could anyone say with any amount of certainty that the market is going to go ____ next year. All we can really do is forecast and provide what is essentially our best guess. So, with that said, here is our formula for our best guess.
THE BIG PICTURE:
Early 2022 was historically unprecedented. Sale prices jumped by $100,000 from December 2021 to January 2022 and then another $20,000 through February. It was a wild ride.
Following that we had the rate hikes through 2022 and 2023 which drove prices down.
INTEREST RATE IMPACT:
If home prices are directly tied to interest rate changes, which they appeared to have been in the last few years, then what impact did those rates have?
This graph shows the average sale price back to January 2022 with the interest rate increases shown in the vertical rectangles.
2024 MARKET FORECAST:
What happens in 2024 if rates are held and then decreased? With a truckload of asterisks and hesitancy, here is what 2024 could look like based on a few rate decreases along with a market that behaves itself.
BUYER DEMAND TRENDS: As with anything, prices will relate directly to buyer demand. How many (homes) are for sale and who wants to buy one. As we observe this trend, this will help to doctate the tale of 2024.
SO, WILL THE PRICE OF YOUR HOME GO UP IN 2024?:
Yes. Probably. And it depends.
While the year gets its wheels turning, we expect a modest improvement in average prices following the lows of November and December 2023. After the rate increases of June and July, the median sale price dropped from $662,000 (June) to $620,000 (August & September) to $600,000 (October and November) to $580,000 (December). That number, along with the average, will improve as we move through winter into the spring. The degree to that improvement is to be determined.
So yes, we do expect that your home will increase in value with the following caveats.
- external (global) events that sideswipe the macro economy
- inflation trending towards the Bank of Canada's goal of 2%
- how the Bank of Canada reacts to inflation as well as economic data
All things being reasonable and continuing on the trends that they currently are, we are optimistic about the market resilience continuing here in 2024.
Questions about your home?