Navigating Canada’s Housing Market: Stability Amidst Change
The Canadian housing market has been closely watched since the Bank of Canada began adjusting interest rates, with many anticipating a strong rebound. However, despite early signs of activity, the market has taken a more measured approach. While some might describe it as stagnant or soft, a better term might be stable.
Market Overview: Stability in the Midst of Fluctuations
In July, Canadian home sales dipped slightly by 0.7%, yet they are still up by 4.8% compared to last year. This is a sign of a market holding steady, according to recent data from the Canadian Real Estate Association (CREA). Senior economist Robert Kavcic from BMO Capital Markets noted that given the wild swings in prices and activity in recent years, this stability is a positive outcome for the industry.
New listings have risen modestly and are now 12.7% higher than last year, slightly above the 10-year average. This increase is allowing inventory to build without overwhelming the market, which has contributed to a balanced sales-to-new-listings ratio of 52.7%.
Mortgage Stability: A Canadian Strength
Despite concerns about the "mortgage renewal cliff," most Canadian homeowners are in good standing. Data from the Canadian Bankers’ Association shows that over 99% of mortgage holders are current on their payments, a rate significantly better than in the United States or the United Kingdom. This resilience is another indicator of the market's stability.
Price Dynamics Across Canada
While the MLS Home Price Index benchmark is down 3.9% over the past year, prices have remained stable over the past six months. Regional differences persist: Alberta and Atlantic Canada remain seller’s markets, while Vancouver and Montreal are balanced. In Ontario, the market varies by region. For instance, Toronto faces opposing trends, with single-detached homes seeing price increases of 3.2% over the last six months, while condo prices have decreased by 2%.
Looking Forward: What’s Next for Canada’s Housing Market?
Although the Bank of Canada’s rate cuts haven’t yet led to a surge in the housing market, stability is not necessarily a negative outcome. If borrowing costs drop to around 4% by next spring, we could see more significant changes. For now, Canada’s housing market remains in a steady state, offering a solid foundation for future growth.
️ Surprising Strength in Housing Starts
July brought an unexpected boost in housing starts, with a 16% increase from June, marking the best month for home construction in a year. This surge, driven by multi-unit starts, is a testament to the resilience of the market and the efforts of governments to push for more rental housing.
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