Mortgage Summary: CREA updates 2025 forecasts with higher sales and price growth

adminJanuary 16, 2025

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Mortgage Summary: CREA updates 2025 forecasts with higher sales and price growth

The Canadian Real Estate Association (CREA) has slightly raised its 2025 home sales and price growth forecasts compared to its fall forecast.

“Our assumption remains that two-and-a-half years of pent-up demand and lower borrowing costs, combined with the typical spring surge in listings, will lead to a pickup in national market activity in 2025,” the association said in its 2025 report. rebound.

The company added that sales data for December and the fourth quarter provided early signs of market developments in the spring.

Sales Forecast: CREA currently expects 532,704 homes to be sold through the MLS in 2025, an 8.6% increase from 2024. 4.5% to 556,662 units.

Average price forecast: The national average home price is expected to reach $722,221 in 2025, an annual increase of 4.7%, slightly higher than the previous forecast of +4.4%. CREA expects another 3.3% growth in 2026, bringing the average price to $746,379.

While areas like Alberta and Saskatchewan are likely to see significant price increases due to tight supply, British Columbia and Ontario are likely to see more modest increases due to rising inventories.

CRA to administer capital gains tax reform despite Parliament recess

The Ministry of Finance has confirmed that the Canada Revenue Agency (CRA) will continue to administer proposed changes to the capital gains inclusion rate, which will come into effect on June 25, 2024.

Under the proposed changes announced in Budget 2024, the taxable portion of capital gains will increase from 50% to 66.67% for companies and trusts, as well as individuals whose annual capital gains exceed $250,000.

The CRA plans to release updated forms by January 31 and will provide delinquent interest and penalty relief for corporations and trusts with filing deadlines on or before March 3, 2025.

The CRA will stop enforcing the new rules if Parliament does not pass legislation when it returns to session, or if the government decides not to make changes, according to a statement from the agency.

In October, economist Jack Mintz warned that increasing capital gains inclusion could lead to the loss of more than 414,000 jobs and a significant C$90 billion hit to the Canadian economy.

Consumer spending rebounds in December after slow start

After a slump in November, holiday spending increased in December as shoppers waited to take advantage of the federal children’s product tax holiday.

Retail sales, excluding autos, fell in November after strong activity earlier in the fall, according to the latest RBC Consumer Spending Tracker. In late November, coinciding with the announcement of the GST/HST exemption, spending in categories such as hobbies, toys and games fell sharply.

Report author Carrie Freestone said the tax holiday, which starts in mid-December, may encourage consumers to delay shopping until they can take advantage of the savings.

“The increase in spending in December came as population growth showed signs of slowing, leading to a second straight increase in per capita spending in the fourth quarter,” Freestone noted.

While the threat of tariffs from the incoming Trump administration in the United States remains a risk, “we still expect lower interest rates to help support stronger real per capita consumer spending in the year ahead,” Freestone added.

2024 Annual Information Return (AIR) Filing Now Open in Ontario

Licensed mortgage brokerages and managers in Ontario can now begin filing their 2024 Annual Information Returns (AIR), a mandatory compliance requirement enforced by Ontario’s Financial Services Regulatory Authority (FSRA). This year, FSRA launched AIR early to provide companies with more time to complete submissions.

Key details:

Who must submit: All licensed brokers and managers, including those that did not conduct any business in 2024.
Purpose: AIR collects information about business practices, internal controls and market conditions to support the FSRA’s risk assessment and regulatory oversight.
Submission deadline: March 31, 2025.
Submission method: AIR must be submitted through the FSRA’s licensing link. Paper submissions are not accepted and the form cannot be changed after submission.
Consequences of non-compliance: Failure to submit on time may result in penalties, including administrative fines or license suspension/revocation.

Brokerage firms must also provide details about their errors and omissions coverage and provide a designated email address for consumer complaints, which may appear on the FSRA public register.

For more information and to access the AIR form, please visit the FSRA website at fsrao.ca.

For other provinces, application requirements and deadlines may vary. Be sure to check with the specific regulatory agency in your province or territory to understand their AIR filing obligations and timelines.

Mortgage snippet

Bond yields are falling from their latest highs: As of Thursday afternoon, Canada’s 5-year government bond yield had fallen to 3.06% from a peak of 3.24% last week. Stocks began to fall after U.S. inflation data released on Monday showed core inflation slowing, allaying some market concerns.
Bond yields are closely tied to fixed mortgage rates, which could signal stabilization in interest rates, which have been trending higher over the past week as yields have risen.

5-Year Treasury Bond Yield — ***Source: tradingeconomics.com***

Mortgage delinquencies increased in October: Canada’s national mortgage delinquency rate rose to 0.21 per cent in October, with 10,286 mortgages currently three months or more past due, according to the Canadian Bankers Association (CBA). This is the highest level of arrears since April 2021 and is up from the pandemic low of 0.14% recorded in 2022.
Saskatchewan has the highest delinquency rate at 0.58 per cent, while Ontario, Quebec and British Columbia have the lowest delinquency rates at 0.17 per cent.

Next Steps: Career Development in the Mortgage Industry

“Next Steps” is a feature in our Mortgage Digest that highlights notable job changes and career developments within the mortgage industry. If you have a job update to share, we welcome your submissions to keep the community informed.

Russ Mendonca Named Vice President of Credit at Bridgewater Associates

***Russ Mendonca, Vice President, Credit Operations, Bridgewater Associates***

Bridgewater Bank announces Lars Mendonca Serves as new Vice President of Credit Operations. In this role, Mendonca will focus on balancing credit risk within the bank’s loan portfolio while driving business growth through efficient operations.

Mendonca has extensive experience in financial services and a strong background in alternative lending.

The company said in a release that Mendonca’s leadership “will enhance the bank’s commitment to delivering flexible, innovative solutions that meet the unique needs of our broker partners.”

“I am excited to join Bridgewater and work with a team that is committed to innovation and creating value for our partners,” Mendonca said. “Together we will deliver a level of service and flexible solutions that brokers can rely on.”

CREA announces interim CEO of REALTOR.ca

CREA has announced Patrick Pichet Serves as interim CEO of its newly formed subsidiary, REALTOR.ca Canada Inc.

Pichette, who has served as Vice President of REALTOR.ca for more than six years, will lead the strategic direction of the platform during this transition.

Pichette has played a key role in building REALTOR.ca into one of Canada’s leading real estate platforms. He also brings experience from senior roles at MD Financial Management and the Canadian Tourism Commission.

“I am honored to continue leading the outstanding REALTOR.ca team and look forward to building on the incredible momentum of the past few years,” said Pichet.