A Snapshot of Canada’s Current Real Estate Landscape
Amid the usual slowdown in seasons, recent reports from the Canadian Real Estate Association bring good news – home sales have held steady month over month. With the Bank of Canada sticking to a 5% target rate and lenders dropping fixed rates over the past few weeks, it seems Canada’s housing market is heading towards stability.
Buyers and sellers are in a bit of a wait-and-watch mode, anticipating potential shifts in interest rates that could shape their decisions. As interest rates look set to decrease, many are getting ready to jump into the market. Economists are eyeing mid-2024 for the expected first rate cut by the Bank of Canada. However, Governor Tiff Macklem has made it clear that this depends on sustained downward momentum in core inflation over several months.
The Core Inflation Story:
The latest inflation report tells a somewhat surprising story – core inflation has stayed put, ranging between 3.5% and 4%. This steady state is unexpected, given initial predictions of a dip below 3% in November.
Governor Macklem’s Take:
Bank of Canada Governor Tiff Macklem sheds light on the situation, expressing his anticipation to start cutting interest rates in 2024. However, he emphasizes the need for a sustained period of downward momentum in core inflation before taking any action.
With both buyers and sellers ready on the sidelines, there’s a palpable potential for increased market activity. The recent drop in fixed rates by lenders sends a clear signal that stakeholders are gearing up for a more stable environment.
As we navigate Canada’s real estate landscape, the consensus among economists is that the first Bank of Canada rate cut is on the horizon. However, the timing depends on the trajectory of core inflation in the next few months.
In conclusion, Canada’s real estate scenario is delicately balanced, with stability on the horizon. As we await further developments, the market’s readiness to respond to potential changes in interest rates showcases the resilience and adaptability of the real estate landscape.