Sellers are returning to Canada’s condominium markets in large numbers, driven by hopes of future interest-rate cuts enticing cautious buyers back, according to a new Remax report.

The report, which examined condo sales from January to August 2024 across seven major cities, revealed a significant surge in condo listings in anticipation of stronger demand in the last quarter of 2024 and into 2025.

The markets analyzed in the report included Greater Vancouver and its Fraser Valley submarket, Calgary, Edmonton, Greater Toronto, Ottawa, and Halifax. The highest inventory growth occurred in the Fraser Valley, with a 58.7% rise in listings, followed by Greater Toronto (52.8%), Calgary (52.4%), Ottawa (44.5%), Edmonton (17.7%), Halifax (8.1%), and Vancouver (7.3%).

Despite this increase in listings, condominium values have remained stable or increased in most markets, with Calgary leading the way with a 15% price gain. Smaller increases were also noted in Edmonton (4%), Ottawa (2.3%), Vancouver (1.9%), Fraser Valley (1.9%), and Halifax (1.2%). However, the Greater Toronto Area was the exception as prices dipped 2% compared to the previous year. Edmonton stood out with a nearly 37% surge in condo sales, marking the strongest growth in the last five years, while Calgary saw a more modest 2.6% rise. Other markets, however, experienced a slowdown in sales activity.

“High interest rates and stringent lending policies pummelled first-time buyers in recent years, preventing many from reaching their home-ownership goal, despite having to pay record-high rental costs that mirrored mortgage payments,” said Remax Canada President Christopher Alexander. “The current lull is the calm before the storm. Come spring of 2025, pent-up demand is expected to fuel stronger market activity, particularly at entry-level price points, as both first-time buyers and investors once again vie for affordable condominium products.”

The report noted that Edmonton and Calgary remain seller’s markets, while conditions in Greater Vancouver, the Fraser Valley, Ottawa, and Halifax are more balanced, with the potential for a shift in 2025. Toronto may be slower to recover, but Alexander noted its reputation for quick market turnarounds.

“Absorption rates will be a key indicator. Certainly, the market forces of supply and demand always prevail, so some neighbourhoods will fare better than others,” he said.

Alexander also pointed out that prices in Toronto may have hit bottom, suggesting that a recovery could be imminent.

While increased inventory is attracting more buyer interest, many prospective purchasers remain hesitant. The first two Bank of Canada interest-rate cuts did not spur significant market engagement, largely due to the severity of previous rate hikes. However, further rate reductions and policy changes to address affordability could see activity increase, especially among end-users, said Remax.

A third-interest rate cut was implemented in early September, outside of the Remax reporting period.

“Even in softer markets, hot pockets tend to emerge,” said Alexander. “In the condominium segment, we’re seeing a diverse mix among the most in-demand areas, ranging from traditional blue-chip communities to gentrifying up-and-comers, as well as suburban hotspots.”

Notably, some condominium markets outperformed broader trends. In Greater Toronto, several midtown communities saw double-digit growth in sales. For example, the Yonge-Eglinton and Forest Hill South areas reported a 25.3% increase in condo sales, while other west-end neighbourhoods like High Park and Roncesvalles saw sales rise by 15.7%. Similarly, in Vancouver, suburban markets like Port Coquitlam, B.C., saw an 11% boost in sales, while Mission, B.C., located in the Fraser Valley, experienced a dramatic 74% year-over-year increase.

Investor activity has slowed, particularly in Toronto, where up to 30% of investors are experiencing negative cash flow due to rising mortgage costs. Alexander predicted that investor confidence will recover as interest rates decline and returns improve.

“In many markets, end users are in the driver’s seat right now,” he said adding that buyers are in the rare position of facing competition from investors and a more ample supply of properties.

The long-term outlook for the condominium market remains strong, bolstered by immigration and inter-provincial migration, particularly as condominiums become an increasingly important step in the housing journey, said Remax. Canada’s urban population continues to grow, with an estimated 80% of Canadians now residing in urban centres. As density and urbanization increase, condominiums are expected to dominate the housing market in major cities.

“The housing mix is evolving very quickly as a result of densification and urbanization,” said Alexander. “Condominiums now represent the heart of our largest cities, and it is inevitable that further development will see condos become the driving force accounting for the lion’s share of sales in years to come.”

According to Alexander, Canadians are embracing this “physical and cultural shift” as younger generations redefine urban neighbourhoods, sparking demand for vibrant and robust amenities and infusing new life into Canada’s urban cores.

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