After a year of cautious optimism and market fluctuations driven by rising borrowing costs, economists are anticipating a potential turnaround in the Canadian housing market in 2024. The key factor influencing this projection is the possibility of the Bank of Canada initiating interest rate cuts, expected as early as the second quarter of the year.
TD Bank economist Rishi Sondhi emphasized the importance of monitoring a potential turning point in the market. Recent months have witnessed subdued sales and price activities, indicating a slowdown. However, there are emerging signs that demand is gradually picking up.
The Canadian Real Estate Association reported softer market conditions since the end of the previous summer, with sellers and potential buyers adopting a wait-and-see approach. While Ontario experienced recent price declines, other provinces like Alberta, Saskatchewan, New Brunswick, Prince Edward Island, and Newfoundland and Labrador have seen prices holding firm or continuing to rise.
CREA chair Larry Cerqua, foreseeing a stabilizing market, expressed optimism about a soft-landing scenario. In Vancouver, realtor Tim Hill noted a shift in sentiment among clients due to modest price improvements. He anticipates increased consumer confidence and a resurgence in real estate activity by the second quarter of 2024.
The Bank of Canada has maintained steady interest rates amid moderate inflation. Although the central bank has not ruled out the possibility of rate hikes, widespread expectations suggest an impending cut. Sondhi acknowledged the risk of maintaining higher rates if inflation remains elevated, adding an element of uncertainty to the economic outlook.
RBC assistant chief economist Nathan Janzen pointed out the unknowns lingering into the new year, highlighting the weakened labor market as a factor influencing housing activity. Despite expecting a sluggish start to 2024, Janzen anticipates a gradual increase in home prices over the second half of the year as the Bank of Canada considers interest rate cuts.
While Janzen does not foresee a rapid recovery, he anticipates a boost in activity and small price increases once the cycle of rate cuts begins. Toronto real estate agent Anne Marie Lorusso echoed this sentiment, predicting a positive spring market with sellers maintaining prices and buyers evaluating their options.
Realtor Tim Hill, however, cautioned against waiting, advising clients to act sooner rather than later. He emphasized the potential rush in late 2024, warning that delayed decisions may lead to increased competition among buyers, reminiscent of a fast-paced scenario akin to the Wild West.
Comments