Cyclical bottom in sight for Canada’s housing market: RBC

According to a new report from RBC, the start of 2023 in Canada’s housing market has been a continuation of the quiet trend seen at the end of 2022.

In the company’s latest special housing report, Robert Hogue, assistant chief economist with RBC, notes that January results from some of Canada’s real estate boards show persistent weak activity and price declines across the country, with few exceptions.

Calgary remains one of the few markets where demand and supply conditions remain “remarkably tight,” though sales volume is down from last year’s “sky-high” levels.

Hogue writes the Bank of Canada’s aggressive rate hike campaign has been a major factor in the slowdown, with many buyers no longer qualifying for mortgages and others seeing a significant reduction in their budgets.

Rapid rise and fall

High-priced markets and areas that experienced rapid growth during the pandemic have seen the most significant drops. According to the report, home resales have plummeted by at least 45 per cent in Vancouver, Toronto and their surrounding regions over the past year; price drops have also been the largest in these markets.

However, Hogue says the correction seems to be easing, with monthly rates of decline slowing in recent months in Ontario (including Toronto), British Columbia (including Vancouver), and other markets.

Cyclical bottom in sight

With the Bank of Canada expected to have completed its rate hike campaign, a cyclical bottom is anticipated in the spring or summer, although the timing may vary market to market, according to the report.

RBC economists expect the recovery to be gradual at first, with the increase in interest rates continuing to hold back activity and purchasing power for some time.

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