Following five consecutive holds of the Bank of Canada’s key interest rate after a year-long hiking cycle, experts believe that a rebound is on the horizon for the national housing market. However, they caution that a significant surge may not happen immediately.
The Bank of Canada is expected to maintain its key rate at the upcoming announcement on April 10, but the future direction remains uncertain. Forecasts suggest that modest rate cuts may be in store later this year, potentially starting as early as June, which could take some time before potential buyers regain confidence.
This uncertainty may lead to cautious behavior among buyers during the spring season, according to TD Bank economist Rishi Sondhi. He mentioned that the housing market in Canada is comparable to a coiled spring, with sales and prices typically rising following a significant market shift, such as an interest rate cut.
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“There’s significant pent-up demand out there, particularly in Ontario and B.C., so it just takes a bit of a spark,” Mr. Sondhi added.
In its recent report on national home sales and pricing data, the Canadian Real Estate Association suggested that February might signal the beginning of a more active period in the housing market. CREA chair Larry Cerqua mentioned that after two years of subdued activity, there is a sense that things are starting to pick up.
“At this point, it’s hard to predict whether buyers will wait for a signal from the Bank of Canada or if they are simply anticipating the spring listings,” Cerqua said.
Real estate agent Dean Artenosi, focusing on the Greater Toronto Area, described the current situation as a turning point where optimism is returning. He noted that the central bank’s indication of stabilized interest rates has boosted buyer confidence.
“Buyers are beginning to re-enter the market, and we are seeing multiple offers on some properties again,” Artenosi said.
However, in Western Canada, activity slowed down in March following a strong start to 2024. Real estate agent Tim Hill mentioned that clients are now waiting for rate reductions before making decisions, anticipating price growth amid lower borrowing costs.
Despite the overall positive outlook, affordability remains a concern in markets like Toronto, Vancouver, and Montreal. RBC assistant chief economist Robert Hogue predicted a gradual rebound later in the year as the central bank continues its rate-cutting cycle.
While some markets, such as Calgary, remain robust due to high demand and limited inventory, others may experience waves of increased activity as buyers react to rate cuts.
“Our view remains that we need to see a significant drop in mortgage rates, which I think is more of a second half of 2024 story than the spring market,” Hogue mentioned.
Artenosi advised clients not to wait for perfect conditions, citing Canada’s growing population as a factor that could impact affordability. He emphasized the importance of making informed decisions in a competitive market.
“Playing the waiting game is a mistake,” Artenosi said, stressing the unpredictability of the real estate market.
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