After the Bank of Canada kept the key interest rate steady five times in a row following its more than a year-long period of raising rates, economists await a housing market rebound but are yet skeptical of a significant spring housing market surge.
The central bank is predicted to maintain its key rate during its upcoming announcement on Wednesday amidst rising concerns about housing affordability and the cost of living in Canada.
Spring Housing Market in Canada
With minor cuts being expected later in the year, some forecasts suggest the possibility of rate cuts starting as early as June. However, it might take some time before buyers feel confident enough to return to the market after being cautious.
Rishi Sondhi, a TD Bank economist, said that the Spring housing market in Canada is like a coiled spring, observing that sales and prices usually surge when there’s a significant change, such as an interest rate cut. This prediction suggests the possibility of a spring housing market surge due to interest rate cuts.
He talked about the spring housing market in Canada, saying there is a lot of demand waiting, especially in Ontario and B.C.
In its recent national home sales and prices report, the Canadian Real Estate Association suggested that February might be the last calm month of the year, suggesting a spring housing market surge.
Larry Cerqua, Chair of CREA, discussed his views on the Spring Housing market in Canada. He said that at this stage, it is still unclear if the buyers will wait for a signal from the Bank of Canada or if they are simply holding off for the spring listings to appear.
Housing Affordability and Cost of Living in Canada
Realtor Dean Artenosi, from the Greater Toronto Area, sees this moment as a turning point where the worst is over. He mentioned that the Bank of Canada’s consistent rate holds have signaled that interest rates have stabilized, giving buyers more confidence in the Spring housing market in Canada.
Artenosi, co-owner of Coldwell Banker The Real Estate Centre Brokerage, said people have adjusted and are comfortable with the higher rates. Buyers are beginning to re-enter the market, and there is talk of rates possibly going down, resulting in a Spring housing market surge.
Robert Hogue, RBC assistant chief economist, said that April will be important in showing how the Spring Housing Market in Canada will unfold.
Despite strong demand, housing affordability and living costs in Canada have remained challenging in markets like Toronto, Vancouver, and Montreal. When discussing housing affordability and the cost of living in Canada, Hogue said they see it more as a budget constraint for buyers than just prudence or caution.
He suggested that Canada might experience mini-waves in certain markets over the next few months as some buyers aim to act before interest rate cuts. Hogue said that to sustain these mini-waves, there needs to be a spring housing market surge in buyers.
Artenosi said they believe there will be a remarkable decrease in mortgage rates in the second half of 2024 rather than the spring housing market in Canada. He advised his clients against waiting.
He added that while borrowing conditions might improve in the coming months, he was worried about other factors like Canada’s growing population, which could affect housing affordability and cost of living in Canada.
Statistics Canada’s live population tracker showed that Canada’s population surpassed 41 million in late March, less than a year after hitting the 40-million mark. He said that with the housing affordability and cost of living in Canada getting affected by the increasing population, waiting around is not a wise move.
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