Five reasons why home prices will rise 10 per cent in 2025

financialpost.com:

I aggressively predicted last year that the Bank of Canada would lower interest rates by two per cent and this would be the key theme of 2024. As it turns out, I was mostly correct since rates fell 1.75 per cent.

In 2025, the central bank has a little more room to lower rates, but the heavy lifting has been done.

This leads to the big theme of 2025: the powerful return of residential real estate. In particular, single-family detached residential real estate (not including condominiums). I believe there will be a 10 per cent increase in price year over year from 2024 to 2025. Here are the main five reasons.

There is a natural life cycle of home-buying, which is almost like human nature. In Canada, once you are able to save some real money ($100,000 to $300,000, depending on the market), the cultural expectation is that you will buy a house of some kind.

While the economy has had some challenges, there are new people entering this group all the time. Once they have the money, they are prepared to buy, but other pieces need to be in place. As you will see below, the planets are getting aligned.

In 2019, residential sales activity across Canada was in the range of 500,000 units, according to the Canadian Real Estate Association. This jumped to the 600,000-to-750,000 range from the first quarter of 2020 through the first quarter of 2022 during the COVID-19 real estate boom. The numbers then dropped back to the 450,000 range for the past two and a half years, even though it was a time of meaningful population growth.

There was a belief that when mortgage rates started falling, housing demand would quickly follow suit. Instead, the demand side has been waiting patiently, adding more to the queue. That lineup is very long at the