Canada’s real estate market is seeing some signs of increased activity, but one economist says a recovery will be gradual until interest rates are firmly moving down.
Robert Hogue, an assistant chief economist at RBC, said in an interview with BNN Bloomberg on Wednesday that “some markets are picking up” across Canada, but on an aggregate basis the recovery in the real estate market “has probably not started.” He added that a recovery could be “gradual at first” and doesn’t expect a drastic increase in activity in the coming months.
Hogue said he is expecting the Bank of Canada to start lowering interest rates in June followed by 100 basis points of cuts over the second half of the year and another 100 basis points of cuts into 2025.
“So the implication for the housing market is that now probably as we get closer to that first cut, we might see a little bit more activity,” he said.
“But really, to make a meaningful difference for many homebuyers who are sitting on the sidelines right now, we would need to see a series of cuts.”
He added that the initial 100 basis points of interest rate cuts from Canada’s central bank will “start to make a material difference” and spur activity.
In a report last week, Hogue highlighted that February real estate data offered some valuable information on the direction real estate markets are moving.
He said that the improving sentiment from rate cut expectations has not yet resulted in a steady recovery, as the “sharp loss of affordability during the pandemic” weighs down buyers.
Between January and February, home resale figures fell 3.1 per cent across Canada, the report said, “reversing about a quarter of the 12.7 per cent increase in the previous two months.” Overall, the market “remains subdued,” Hogue highlighted in the report, as the total number of units sold in February came in at 461,000 which was 11 per cent lower than the 10-year average.
However, Calgary’s real estate market was an outlier in February, as home sales were 60 per cent higher than pre-pandemic levels, the report said.
Buyer and seller ‘standoff’
In speaking with BNN Bloomberg, Hogue highlighted that sellers largely passed on listing homes in the fall due to softer demand, placing their hopes instead on the spring market.
“More sellers are likely to come over to the springtime. And we’re starting to see new listings making their way up,” he said adding that some sellers are under pressure to sell at certain price points and may not have a large degree of flexibility.
On the other side, Hogue said buyers “don’t have much room to manoeuvre either” amid high interest rates and poor affordability conditions.
“That’s why we think there could be a bit of a standoff between buyers and sellers over the coming months,” he said.
TORONTO – One expert predicts Ottawa‘s changes to mortgage rules will help spur demand among potential homebuyers but says policies aimed at driving new supply are needed to address the “core issues” facing the market.
The federal government’s changes, set to come into force mid-December, include a higher price cap for insured mortgages to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
CIBC Capital Markets deputy chief economist Benjamin Tal calls it a “significant” move likely to accelerate the recovery of the housing market, a process already underway as interest rates have begun to fall.
However, he says in a note that policymakers should aim to “prevent that from becoming too much of a good thing” through policies geared toward the supply side.
Tal says the main issue is the lack of supply available to respond to Canada’s rapidly increasing population, particularly in major cities.
This report by The Canadian Press was first published Sept. 17,2024.
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
