From Trudeau's Resignation to Trump's Presidency: A New Era for Canadian Property As We Approach The First BoC Announcement of 2025

In this episode I discuss the real estate market's revival in late 2024 due to lower interest rates, revised mortgage rules, and increased buyer demand, with a focus on townhomes and the expected focus on housing supply and affordability in the upcoming spring 2025 federal election. I also touch on the upcoming Bank of Canada's policy announcement on January 29th, the implications of tariffs, and the factors influencing house prices. The conversation ends with a mention of Sherry Cooper's prediction of a 25 basis point rate cut to 3.0%.

Ciao! Welcome to a new episode of Building Wealth Through Real Estate...Brick by Brick with me, Nico James-Bock, Founder of The CondoWiz™ Group and Broker at Royal LePage Signature Realty in Downtown Toronto. 

Highlights & Takeaways

• Bank of Canada to announce interest rate decision on January 29th, 2025.
• Federal Reserve (US) to announce interest rate policy on January 29th, 2025.
• Canadian government to monitor and respond to potential 25% tariffs on Canada by the US, set to take effect on February 1st, 2025.
• Canadian government to continue addressing housing supply and affordability issues in preparation for the likely spring 2025 Federal election.
• Bank of Canada to prioritize recession risks over inflation control if US tariffs are implemented.
• Canadian border authorities to maintain tightened border measures in response to Fentanyl export claims.
• Real estate professionals to monitor the impact of recent mortgage policy revisions on buyer behavior and market trends.

Ciao ciao 

Find me - Nico's Social Channels

Transcript

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Nico James-Bock: Trump just took office as the 47th President of the United States. At the same time our own Prime Minister is preparing to step down. What does all this mean for Canada's housing market? Welcome to a new episode of brick by brick building wealth through real estate. My name is Nico, James Bonk, and I am a

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Nico James-Bock: broker at Royal Lepage signature realty in downtown Toronto. I want to take a look at the 7 takeaways to summarize where things stand as of January 25, th 2025,

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Nico James-Bock: number one, the market revival in late 2024. Now, despite economic and political uncertainties, Canada's real estate market rebounded, due to lower interest rates, revised mortgage rules and increased buyer demand. This resulted in a 3.8% year over year. Price increase and moderate quarter over quarter growth at 0 point 5%

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Nico James-Bock: number 2 interest rate trends and affordability

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Nico James-Bock: falling interest rates. We've been in a falling interest rate environment since June 5, th 2024, with potential for a further 100 basis point cut in 2025 are improving affordability. New mortgage rules are aiding younger Canadians and first-time buyers by increasing borrowing power and reducing monthly costs.

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Nico James-Bock: The 3rd factor that we want to consider when summarizing where things stand are housing prices by type. In the 4th quarter of 2024, the median price of single family detached homes rose 4.9% year over year to 855,900, while condominium prices increased 1.5% to 592,700

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Nico James-Bock: quarter over quarter prices change were minimal. Now these are national averages. Local regional stats are on my social channels. A recent trend has seen an increase in popularity of townhomes, so that includes freehold townhomes, common elements, condo townhomes

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Nico James-Bock: and condominium townhomes. So that form factor, that type of housing has shown an increase in popularity regionally and through most buyer sectors.

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Nico James-Bock: The 4th takeaway Federal election impacts a likely spring 2025, Federal election following Justin Trudeau's resignation may add to the uncertainty that many of us are feeling, however, housing, supply and affordability are expected to remain top priorities

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Nico James-Bock: with long-standing, underbuilding and population growth worsening the crisis.

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Nico James-Bock: The 5th takeaway is mortgage policy revisions, new regulations include expanded eligibility for thirty-year amortizations, a higher mortgage insurance cap to 1.5 million from the previous 1 million and removal of the stress test for uninsured borrowers, switching lenders, enhancing accessibility and choice for buyers and

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Nico James-Bock: homeowners. The stress test is still required for new mortgages, but the removal of the stress test for those that are renewing or switching lenders is of great help to those that are feeling. The pinch of the higher interest rates

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Nico James-Bock: improved home ownership, accessibility. Now, policy changes reduce monthly carrying costs and address affordability barriers, particularly for first-time buyers and those in expensive markets like Toronto

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Nico James-Bock: Oakville, Burlington, Aurora, and some parts of other parts of York region. Despite longer amortization periods potentially leading to higher overall interest costs. It is improving home ownership, however, now the 7th takeaway, the final takeaway from this

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Nico James-Bock: unprecedented period, the January 29, th 225 marks, the next and 1st interest rate policy announcement by the Bank of Canada, and at the same time the Federal Reserve in the Us. Donald Trump made the announcement that 25% tariffs will be slapped on Canada and Mexico. 10% tariffs for China to go into effect on February first.st

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Nico James-Bock: Whether that actually takes place remains to be seen. The Bank of Canada's policy announcement on the 29th of January will deal with domestic issues which are pressing. They will deal with those issues first, st and then they will address possible outcomes of any tariffs.

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Nico James-Bock: If we take a closer look at inflation and unemployment considerations. Dr. Sherry Cooper came out with her analysis of what is taking place. The 1st important consideration is inflation data for December 2024, which is the most recent time period that we have.

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Nico James-Bock: Cpi increased by 1.8% year over year, slightly below November's 1.9% mark, and that marks of reduction a fall in the inflation rate excluding food. Cpi rose by 2.1%. Now, shelter cost

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Nico James-Bock: did slow with rent prices increasing at a deceleration rate 7.1% versus 7.7% in November, and since December 2021 rent prices have risen by 22.1% a sales tax holiday

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Nico James-Bock: that we experienced at the start or the midpoint of December 2024 contributed to the downward distortion in inflation, numbers, core inflation concerns. Now the trimmed mean and median inflation. 3 month averages exceeded 3.5

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Nico James-Bock: 0% signaling persistent inflationary pressures. So we're still in that environment where inflation is still a little bit on the higher side there are pressures that are exerting their influence on the inflation rate. The bank of Canada's decision, a 25 basis

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Nico James-Bock: point rate cut is Sherry's prediction, and as well as other economists to 3.0%, is anticipated at the 29, th on the 29, th which is just within a few days now due to current inflation, environment and broader economic trends. I believe that 25 basis point rate cut is in the bag. I don't think it'll be higher than that.

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Nico James-Bock: Us. Canada trade dynamics is a 4th consideration concerns about trump seeking to renegotiate the Usmca. Canada has denied fentanyl export claims and tightened its borders. Those measures have already taken place.

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Nico James-Bock: Now, the risk of a 25% tariff is real, but likely short-lived if implemented due to anticipated retaliation. So there is that chance that we will retaliate, or the Us. Believes we will retaliate. So we may not see a long period of a 25% tariff.

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Nico James-Bock: Speaking of these implications, tariffs might temporarily raise inflation, but would likely lead to layoffs, reduced business activity, and higher unemployment. The Bank of Canada would prioritize recession risks over inflation control in such a scenario. Recession is something that the Bank of Canada really does not want

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Nico James-Bock: to see us in, so that really would be the priority. Now, this combination of economic factors, including the rate cut expectation, slower Cpi growth

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Nico James-Bock: and trade uncertainties, paints a nuanced picture for Canada's economy. How do you see this influencing real estate activity in 2025,

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Nico James-Bock: particularly regarding buyer sentiment and mortgage trends? Keep in mind the 7 factors that influence house prices. They are cost of ownership, job security

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Nico James-Bock: population growth supply regulatory changes.

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Nico James-Bock: global factors. And finally, replacement value versus market value. These are unprecedented times, and the 1st 6 factors are exerting their influence on house prices. So it remains to be seen exactly what will play out after the

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Nico James-Bock: announcement of the Bank of Canada, as well as what will happen after February first.st

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Nico James-Bock: That concludes this episode, there are

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Nico James-Bock: a summary. There is a summary in the notes as well as my contact information. As usual. As I mentioned before, you can get all of the most recent stats on my social channels. Ciao Ciao.