Canadian Real Estate Market: What You Need to Know Now
Canadian Real Estate Market: What You Need to Know Now
Alex McFadyen
June 1, 2024
If you're trying to figure out all the different announcements about the housing market recently, you're not alone. Everyone is concerned about what's going on. Questions about when prices will go up or down, upcoming mortgage renewals, and new tax rules are on everyone's minds. Let's break it down.
New Tax Rules: What You Need to Know
Selling Investment Properties
In April 2024, the Canadian government introduced new tax rules impacting those selling investment properties. Here are the key points:
New Threshold: If you make more than $250,000 in profit on a property, the amount above $250,000 will be taxed.
Increased Tax Rate: You'll be taxed at 66% of the amount over $250,000, up from the previous 50%.
Marginal Tax Rate: This doesn't mean a 66% tax rate on the profit. You will be taxed at your marginal tax rate on 66% of the amount over $250,000.
No need to rush and sell off your properties just yet. These changes will take effect in June.
First-Time Homebuyer Benefits
There have been slight changes to first-time homebuyer benefits:
RRSP Withdrawals: You can now use up to $60,000 of your RRSPs tax-free, up from the previous $35,000.
Amortization: Starting in August, first-time buyers can opt for a 30-year amortization if it's a new build property. This increases borrowing power by about 5%.
Rate Predictions for 2024
This year has already been unpredictable. Here's a quick rundown of what's happened and what's expected:
Early 2024: Market rates dropped significantly due to lower bond yields.
Spring 2024: Bond yields increased, bringing rates up by half a percent.
Fixed Rates: We might see a decline in fixed rates due to lower oil costs and lower than expected job volume.
Rate Reduction: There's a 70% chance of a rate drop, possibly by a quarter point in June.
Future Projections: Over the next three years, rates are expected to drop by about 1.75% to 2.25%.
If you're in a variable rate mortgage, this is good news. For potential buyers, it's ideal to get pre-approved before June to lock in lower rates.
Real Estate Market Trends
The market has been quite the rollercoaster this year:
Early 2024: The market was booming until March.
April 2024: Things slowed down due to the Bank of Canada's decision not to lower rates, giving buyers more inventory and choices.
Supply Levels: Despite the current pause, low supply levels mean this situation might not last long.
Renewals: Act Now!
Mortgage renewals are a hot topic. Every day, clients reach out about renewals because banks are often dropping the ball. Here's what you need to know:
Don't Wait: Reach out before your renewal date.
Options: We can help lower your payments, extend your amortization, or get lower interest rates.
Moving to Different Areas
We're seeing more families move to different areas, including Alberta. If you're moving, consider these points:
Mortgage: Make sure you know the requirements for getting a mortgage in your new location.
Income: Consider if you'll be bringing your income with you.
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