After five consecutive holds on the Bank of Canada's key interest rate following its extended hiking spree, economists predict a rebound for the national housing market. However, they caution against expecting a significant surge just yet.
The Bank of Canada is anticipated to maintain its key rate when it announces its decision on Wednesday, though the future trajectory remains uncertain. With potential modest cuts looming later in the year — some foreseeing them as early as June — it could take time for buyers to regain confidence and re-engage with the market.
This uncertainty may lead some buyers to exercise caution throughout the spring season, according to TD Bank economist Rishi Sondhi. He suggests that the housing market in Canada is comparable to a coiled spring, waiting for a catalyst such as an interest rate cut to unleash pent-up demand.
The Canadian Real Estate Association's latest report hinted at a potential uptick in activity, suggesting that February might have been the last quiet month for the market. CREA Chair Larry Cerqua noted a sense of anticipation among buyers, speculating whether they are awaiting signals from the Bank of Canada or the traditional influx of spring listings.
In the Greater Toronto Area, realtor Dean Artenosi describes the current moment as a turning point, indicating that buyers are becoming more optimistic with the perceived stabilization of interest rates. He observes a return to multiple offers on properties, signaling renewed buyer confidence.
However, out West, activity cooled in March after a strong start to the year. Vancouver real estate agent Tim Hill suggests that many clients are in a holding pattern, waiting for anticipated rate decreases.
RBC assistant chief economist Robert Hogue predicts a gradual rebound later in the year rather than an immediate surge following the first rate cut. He acknowledges exceptions such as Calgary, where demand remains robust due to interprovincial migration and limited inventory.
Despite pent-up demand, affordability remains a significant concern in markets like Toronto, Vancouver, and Montreal. Hogue emphasizes the need for significant drops in mortgage rates to sustain increased activity, a scenario he believes is more likely in the latter half of 2024.
Artenosi advises clients against waiting, citing Canada's growing population and the risk of getting caught in bidding wars. He emphasizes the absence of a perfect scenario and urges buyers to act decisively rather than wait for optimal conditions.
In summary, while economists anticipate a rebound in the Canadian housing market, factors such as affordability and the cost of living may temper the extent of any surge, particularly in the near term. Buyers are advised to consider their options carefully and act promptly to navigate the evolving market dynamics.
Comments