Markham Feb 2025 market update with Canadian Mortgage Trends

Markham Feb 2025 market update with Canadian Mortgage Trends

Markham Housing Market Overview

  • Price Trends:
     Overall, the average price for all housing in Markham has dropped compared to last year. Notably, the detached housing segment experienced the most significant decline, with average prices falling by approximately 6.5% year-over-year. Despite these declines, the overall annual average price remains relatively steady.
  • Inventory Dynamics:
     New listings have increased since December—a seasonal trend consistent with previous years. However, sold listings have either plateaued or declined slightly since January, suggesting a cooler market ahead with the potential for further price reductions as the spring market unfolds.

Canadian Mortgage Market Trends

  • Signs of Recovery:
     Since the onset of winter 2024, Canada's mortgage sector has demonstrated resilience. In December 2024, mortgage issuance surged by 85.6% year-over-year—25% above the average for December over the past five years. Over the past 12 months, total mortgage issuance grew by 15.2%, driven by increased activity in new home purchase loans, refinancing, and loan renewals.
  • Shift Toward Variable-Rate Mortgages:
     Borrowers are increasingly favoring variable-rate mortgages, with 29% now choosing these products—the highest level in two and a half years. This trend is likely influenced by expectations of future interest rate cuts.
  • Debt Service and Affordability:
     The average Gross Debt Service (GDS) ratio for approved mortgages stands at 31.1%, the lowest since August 2021. This indicates that many dual-income households across Canada can manage home purchase costs, although buyers might still face challenges in entering the most desirable neighborhoods.
  • Insured Mortgage Market Contraction:
     The insured mortgage market, which serves buyers with less than 20% down, has contracted. Total insured mortgage amounts have fallen to CAD 381.2 billion, the lowest since before the 2007 global financial crisis. This reduction is due in part to the Canadian government’s decreased involvement in the mortgage insurance market, resulting in reduced liquidity, fewer product options, and higher borrowing costs.
  • Bond Market, Tariff Uncertainty, and Inflation Dynamics:
     Recent shifts in the bond market, including a 10 basis point drop in Canadian 5-year government bond yields (compared to a 7 basis point drop in U.S. yields), reflect concerns over slowing business activity, potential geopolitical impacts, and supply chain disruptions. Added to these concerns is the uncertainty surrounding U.S. tariffs, which continues to weigh on investor sentiment and could further impact economic growth. While Canadian retail sales saw a robust 2.5% increase in December 2024, preliminary data for January 2025 showed a 0.4% decline, hinting at underlying economic pressures. Meanwhile, inflationary expectations remain a risk, as inflation breadth has significantly exceeded long-term averages.
  • Market Outlook and Policy Expectations:
     Ahead of the Bank of Canada’s March rate decision, market sentiment remains divided. There is a 41% probability of a 25-basis-point rate cut versus a 59% chance of rates holding steady. These policy decisions will be pivotal in shaping both the mortgage landscape and the broader economic outlook for 2025 and beyond.

Conclusion

The Markham housing market is exhibiting signs of a cooling phase, with increased listings and a notable drop in detached home prices indicating that further declines may be on the horizon this spring. At the same time, Canada’s mortgage market is gradually recovering, driven by robust loan activity and a growing preference for variable-rate products. However, persistent economic uncertainties—including inflationary pressures, reduced insured mortgage liquidity, and the lingering uncertainty regarding U.S. tariffs—underscore the need for cautious optimism as the market navigates these challenges.

Both the local dynamics in Markham and the broader trends in the Canadian mortgage sector highlight the complex interplay between seasonal shifts and long-term economic forces. Stakeholders will be watching closely for signs of stabilization and growth in the coming months as market conditions continue to evolve.

 



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