Mortgage Basics

Is Now a Good Time to Buy a House in Canada?

Is Now a Good Time to Buy a House in Canada?

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    This blog is a collaboration between Zolo and

    Is it a good time to buy a house? Like many other Canadians, you’re not alone if you struggle to answer this question. It’s been an intense few years in the Canadian property market. After a record increase in house prices throughout the pandemic, followed by increases in the Bank of Canada policy rate, Canadians are now more uncertain about buying than ever. 

    For context, the price of a home in Canada rose by almost 27% in 2021. Further price hikes followed at the beginning of 2022 before the end of the year saw home prices decline 12%, not enough to correct the increases seen during the pandemic. 

    While major cities like Toronto and Vancouver saw some of the highest price increases, the strain on property inventory has been a problem throughout the country. Coupled with record-high home prices, to fight inflation, the Bank of Canada began increasing the policy interest rate in 2022 until it reached 5% in July 2023. 

    Finally, though, we’re starting to see a slowdown — at least in the stratospheric trajectory that house prices have been on for the last two years. And with interest rates at highs not seen since the early 2000s, many Canadians are left wondering: Should I buy a house now?

    To help you figure it out, we’ve broken down the main factors to consider if you’re a prospective homeowner in Canada.

    Key Takeaways

    • The best time to buy often depends on regional market trends and seasonal patterns.
    • Your personal financial situation and long-term plans play a crucial role in determining if now is the right time to buy.
    • Researching and connecting with professionals can help ensure you get a great deal on your home purchase.

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    Market Considerations for First-Time Home Buyers

    Buying a house is a considerable commitment and depends on whether or not you have the budget, job stability, and credit to justify it. If you’re thinking of buying a home soon, here are some market conditions that should inform your decision to buy or not in 2024.

    #1. What Do Interest Rates Look Like?

    For the last decade, the Bank of Canada’s key policy rate hasn’t been higher than 1.75%. Currently, however, the rate sits at , with many economists anticipating rates to remain around 5% until mid-2024 to curb inflation and the rising cost of housing. Since mortgage rates are closely related to the Bank of Canada’s central rate, these are expected to remain elevated. What does that mean for home buyers? Higher mortgage rates mean higher monthly payments, with a slight percentage difference over the lifetime of a loan equalling thousands of dollars. Conversely, you could argue that now is the best time to buy a home since interest rates could climb even further if predictions are wrong.

    #2. Will Home Prices Continue Rising?

    This one’s up for debate. While we’ve seen house prices decline recently, they are still up 1.1% from this time last year and 28.4% compared to 3 years ago. For example, the average price of a Toronto home in 2023 may have risen by 2.4% compared to last year but fallen by 3.8% compared to 3 months prior. 

    In simple terms? House prices shot way up during 2021 and early 2022, but they’ve started to cool down. Of course, they’re still not as cheap as pre-COVID, but market activity is slowing, and house price rises, while ongoing, are not as intense as they were a few years ago.

    #3. Is it a Seller’s Market?

    In a seller’s market, sellers have more leverage because the supply of new listings is low or demand is unseasonably high. Both have been true in Canada for the last two years. In technical terms, a seller’s market has a sales to new listings ratio (SNLR) of 60% or more. 

    This means, in simple terms, that there is a higher amount of sales compared to newly available homes, so things get snatched up quickly. Almost without fail, most major and secondary cities in Canada have been sellers’ markets for the duration of the pandemic. Today, most markets have fallen below that all-important 60% figure to balanced or buyer’s territory.

    #4. How Fast Are Homes Selling?

    As mentioned, the sales pace has been blisteringly fast for the last few years, with houses getting bought almost immediately after listing in some instances. However, we are starting to see a slowdown. For example, Toronto’s sales to new listings ratio (SNLR) fell to 29% in September from 43% the month prior since there were more listings than the number of homes purchased. 

    This reflects a broader nationwide trend, as the number of newly listed properties in Canada was up 6.3% in September 2023 compared to the prior month. Meanwhile, according to the Canadian Real Estate Association (CREA), home sales recorded a 1.9% decline between August and September, the third monthly decline in a row.

    Is Now a Good Time to Buy a House?

    Mortgage rates are currently sitting at highs not seen since 2001. Home prices have increased significantly since then, coupled with high interest rates, making it hard for many would-be homebuyers to qualify for a mortgage and want to enter the housing market at this time.

    However, buying now, if you have the means to do so, means you can start building equity right away rather than waiting for home prices or interest rates to fall first. Equity increases your net worth, and having equity in a home gives you the flexibility to leverage the value of your home when you need it most. 

    Additionally, purchasing now rather than waiting may give you bargaining power when negotiating home prices. Today, most housing markets are in a balanced or buyers market, meaning there are currently more homes on the market than buyers. If mortgage rates drop, which experts predict could happen in mid-2024, buyers sitting on the sidelines will return to the housing market, driving competition and higher home prices. 

    Now might be the right time to buy if you have excellent credit, have enough saved for a downpayment, can comfortably afford the projected mortgage payments, and can see yourself staying in the home for the foreseeable future. 

    How Important is Seasonality When Buying a Home?

    The time of year can play a significant role in the home-buying process. The housing market follows a seasonal cycle created by supply and demand. Seasonality affects the number of homes on the market and the purchase price. 

    Historically, home sales pick up in the spring and summer, then cool during the fall and winter. If you’re looking for a deal in the housing market, the best time to buy is in the fall and winter when inventory and the number of buyers decline. Spring and summer tend to be hot markets where inventory and buyers pick up, driving prices higher. 

    Below, we explore how each season can impact your decision to purchase a property.

    Buying a Home in Winter

    Winter is often overlooked primarily due to the cold weather and holidays. Only a few prospective homebuyers want to brave the winter weather to look at homes, and the holidays are generally too busy for most with family plans to keep up the home search. 

    Fewer buyers in the market means less competition and more potential to negotiate a lower price. During winter, sellers are usually highly motivated to sell, leaving plenty of room for negotiation.

    However, there are a few downsides to purchasing during the winter months. Less inventory means fewer options for homes. Additionally, home inspections of outdoor areas can be challenging due to snow and ice. 

    Buying a Home in the Spring

    Spring is typically the busiest time of year for real estate. More properties become available, giving prospective buyers more options. 

    With the weather improving, this makes it an ideal time to highlight a home’s curb appeal with landscaping, making properties more attractive to potential buyers. Nicer weather also makes it easier for home inspections to be completed on the property’s exterior. 

    However, purchasing in the spring means you will compete with many other potential buyers, which could result in bidding wars. You could pay way more for a property than if you purchased any other time of the year. There’s often less room to negotiate with sellers in a hot housing market. 

    Buying a home in the Summer

    The summer months typically continue the momentum of the spring market with higher inventory and buyer demand. The weather makes it an ideal time to view homes, and the many open houses make it easier to view multiple properties on the same day. 

    Early summer typically mirrors the spring market, with little room to negotiate with sellers and the potential for bidding wars. Buyers with children are motivated to purchase by this point, so they have time to settle into their new homes before the school year begins. 

    Late summer can offer a better balance as the market begins to cool with less buyer competition and a bit more room for negotiations, as sellers may be more motivated to sell their properties before the market starts to decline in the fall.  

    Buying a Home in the Fall

    As the leaves start to turn, so do home prices typically in favour of the buyer. The buying frenzy of the spring and summer markets is beginning to cool, and sellers who have failed to sell may be more willing to negotiate prices before the winter slow down. 

    Fall typically still has a balanced level of inventory with more competitive pricing. Weather is still relatively favourable for exterior home inspections, and as the season progresses, buyers may have more negotiating power to secure a deal before winter. 

    However, as winter approaches, the number of home listings may decrease, giving you fewer options. 

    How to Research Market Trends to Get a Good Price On Your Home

    Understanding how to research and read into market trends is essential to getting a deal as a buyer. Here are some strategies to help you navigate the housing market. 

    • Monitor online news – the internet is a great source of information. You can find information on the housing market through media and news sites, real estate websites, and even blogs focused on the housing market. Google allows you to create free Google Alerts that notify you when a page matching your keywords appears in its search engine. 
    • Social media – Following real estate agents, brokers, agencies, and experts in the real estate field on social media can help you keep up with the latest trends in the market. However, ensure you follow credible sources so the information you receive is factual. 
    • Monitor mortgage rates – rates are constantly changing, which can significantly impact your purchasing power and ability to qualify for a mortgage. Keeping a close eye on rates, which can be accessed online across all the big banks and lender sites and monitoring the trends and patterns the market cycles through can help you identify the most advantageous time to enter the market.  
    • Track home prices and the market – regularly check home prices in your area using local real estate board websites or CREA, which can keep you updated on home prices and trends. Pay particular attention to the type of market your desired area is in, which can be found in each regional board’s monthly housing market report. A buyer’s market, characterized by low prices and high availability, is an ideal time to make a purchase. A seller’s market, where prices are high and availability is low, can be challenging for buyers. 
    • Seek professional advice – engage with a real estate agent with comprehensive knowledge of the local real estate market. They can provide insights into local market data and trends to help you find the ideal time to get a good deal on a home. 

    Frequently Asked Questions

    Is now a good time to buy a home in Canada?

    As we move from fall to winter, now could be the ideal time to purchase if you have a downpayment ready and qualify for a mortgage. Your agent is more likely to be able to negotiate a lower price on a home during the fall and winter months than in the spring when the market heats up once again.

    Should I buy a house or wait until 2024?

    Purchasing now rather than waiting will mean you have more negotiating power as most markets are currently in a balanced or buyers market. There are no guarantees that interest rates will decrease as projected in 2024. There is always a chance predictions are wrong, and rates could increase or stay the same. If rates decrease as predicted, markets may move back into seller territory, and you could find yourself in bidding wars with less negotiating power as buyers return to the market.

    How do I know if it’s a buyer’s or seller’s market?

    You can easily determine if the market is in buyer’s or seller’s territory by looking for the sales-to-new listings ratio (SNLR) in regional housing market reports. A seller’s market is when the SNLR is 60% or higher, a balanced market is between 40% and 60%, and a buyer’s market is below 40%.

    Final Thoughts

    Ultimately, the answer to the question, “Is now a good time to buy a house?” depends on your individual circumstances. While it’s important to consider seasonality and market conditions, it’s equally crucial to evaluate your finances and long-term plans. It’s impossible to perfectly time the market, but understanding what influences the housing market and interest rates can help you secure a deal. 

    Whether you decide to buy now or wait, reach out to nesto’s experienced mortgage experts, who can help you secure the best rate on your mortgage.

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