After the Canadian Real Estate Association (CREA) released data on Monday showing that the country’s home sales for 2023 were the lowest since 2008, the president and CEO of Royal LePage says the tide is about to turn.

Phil Soper, president and CEO of Royal LePage, joined BNN Bloomberg on Monday to discuss market anticipation as Canadians gear up for expected interest rate cuts by the central bank. Despite 2023’s low market activity, Soper pointed to a nine per cent jump in home sales in December compared to November. 

He also pointed to changing market sentiment indicators, like showings which he said are “way up.” 

“We’re seeing more listings, more showings,” he said. “We had a stronger December than anticipated.”

Soper said the anticipation of further interest rate cuts will likely cause buyers to act early.

“Like the stock market, when you’re in a position like this when there’s a big change coming, where people anticipate something coming, there’s going to be action in the market before it actually arrives,” he explained.

“That’s the thinking behind the first quarter, the change, the tipping point where activity level picks up and before the end of March. We believe we‘ll see the first bump up in prices on a year-over-year basis.”

Soper said a major part of home buying sentiment is tied to first-time buyers.

“Rates are coming down, but how far down are they coming? Prices are going to go up, but if you’re particular, the biggest missing slice of the pie is first-time home buyers,” he said. “They just haven’t been coming to the table in 2023.”

Soper explained that homeowners already in the market will likely face less risk in 2024 than first-time buyers.

“At least if you’re a homeowner, you sell a home, you buy a home in the same market, they kind of even out. Maybe you get a little less for the one you’re selling but you buy one for a little less. You’re a first-time home buyer you don’t want to get in the market if you think the home’s going to be cheaper in a month or six months.”

Overall, Soper explained that Royal LePage believes home prices will move 5.5 per cent higher nationally by the start of next year.

 He also explained that market activity will see a gradual increase.

“It’s a swing. It changes from negative (to) positive in the first quarter. The second quarter we see a little bit more, but a very gradual incline. And then our model is based on a mid-year, call it July 1 interest rate decline, and then a little steeper climb and a little steeper climb to that 5.5 per cent.”

 It’s not that interest rate cuts won’t “spur the market on,” Soper said. “It’s just that 25 basis points isn’t going to make a big material difference for mortgage payments. It’s more psychological.”