It has been more than a year since the Bank of Canada kicked off its tightening cycle, raising interest rates to their highest levels since the global financial crisis and trimming its enormous pandemic-era balance sheet. What has changed? The most notable development was the considerable correction for the Canadian real estate market, with sales activity slowing and prices coming down. But is this the correction? This is the debate a wide range of market analysts are having today. However, industry observers note that the results from the typically busy spring buying season should offer insight into what the rest of the national housing sector could look like for the remainder of 2023. For now, the latest housing numbers might answer the question: is the housing market turning around?
What is driving the latest rebound?
- Interest rate hikes are nearing thier end
- demand is outpacing supply
- Home prices might have bottomed
Time to buy?
The conventional five-year mortgage lending rate was 5.85 per cent in June, the highest since January 2023. Canadian consumer confidence is on the rise. Housing optimism is back in the Canadian real estate market. While Statistics Canada notes that pandemic-era savings have been exhausted, the labour market remains strong, and the credit crunch south of the border does not appear to have impacted the nation’s banking system too much.
Does this all mean that now is the time to buy? If the buyers have returned with full force, the bank economists might be correct: the housing market has turned a corner.