The real estate market of Canada is showing signs of increased activity, but economist Robert Hogue believes that it will take some time to reach full recovery, which will only be possible when the interest rates decrease.
Real Estate Market of Canada
Hogue is an assistant chief economist at RBC who said in an interview with BNN Bloomberg on Wednesday that while some parts of the Canadian real estate market have been doing well, the overall picture is that it has not started on its journey of full recovery.
He expects the recovery of real estate in Canada to be slow at first and has not predicted a significant increase in the activity of the real estate market in Canada in the upcoming months.
Hogue expects the Bank of Canada to start lowering interest rates in June. He is expecting 100 basis points of cuts throughout the second half of this year, followed by another 100 basis points of cuts into 2025.
He has said that the implication for the real estate market of Canada is that as the economy moves towards the first rate cut, more of the activity could be seen. Hogue said that to have a significant impact on real estate in Canada and potential homebuyers who are currently waiting, the economy needs to see a series of cuts.
He added that the Bank of Canada’s initial 100 basis points of interest rate cuts will only start to have a noticeable impact and will encourage more activity in the Spring real estate market. In a report last week, Hogue said that February’s real estate data showed valuable insights into the direction of real estate in Canada.
He mentioned that although there is a positive sentiment in real estate in Canada due to the possibility of rate cuts, however, a consistent recovery is yet to be reached. He added that the significant affordability loss during the pandemic still burdens potential buyers in the Spring real estate market.
The report showed that between January and February, home resale figures in real estate in Canada had decreased by 3.1%, going back on the progress made by an increase of a quarter of the 12.7% from the previous two months. The real estate market of Canada continues to be slow, with February’s total units sold at 461,000, which is 11% lower than the 10-year average.
However, Calgary stood out in February, with its real estate market being an exception. The report mentioned that home sales in Calgary were 60% higher than before the pandemic.
Speaking with BNN Bloomberg, Hogue said many sellers were holding off listing their homes in the fall due to weaker demand and instead focused their hopes on the spring real estate market.
He added that more sellers are expected to join the Spring real estate market and have already seen an increase in new listings. Hogue also added that some sellers might feel compelled to sell at specific price points and may not have much room for negotiation in the Spring real estate market.
Hogue mentioned that buyers also face challenges with high interest rates and tough affordability conditions in the upcoming Spring real estate market. He added that buyers do not have much flexibility either, which is why there is a possibility of a potential standoff between buyers and sellers in the Spring real estate market.
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