Canadians Awaiting Rate Cuts to Re-Enter Housing Market

A new study by Dye & Durham Ltd. has revealed that Canadians are becoming more optimistic about their finances and are planning to re-enter the housing market when interest rates are cut. 

The Dye & Durham Canadian Pulse Report, which interviewed 1,015 Canadians in the first quarter of 2024, found that more Canadians now feel they are in a better financial position than a year ago, with 36% of respondents aged 18 to 34. The number of Canadians in a worse financial position has decreased to 39% from 44% in the previous survey. 

Many Canadians believe that Canada is already in a recession, but 20% are less pessimistic about the economy and believe the country will avoid a complete recession, up from only 9% in the fourth quarter of 2023. 

The number of Canadians waiting for interest rate drops to buy or sell a house or property has increased to 26% from 21% in the previous quarter. This surge in activity could result in a slower spring real estate market that quickly ramps up in the second half of 2024, resulting in a rebound of activity for relevant professionals like lawyers and realtors.

Source: Financial Post 

Ottawa to Launch $6-Billion Infrastructure Fund to Help Build Homes — With Strings Attached

The Canadian government is set to allocate a $6-billion infrastructure fund to support homebuilding and a $400 million top-up to the housing accelerator fund, according to Prime Minister Justin Trudeau. The announcement comes during the government’s pre-budget tour, which aims to raise awareness and support on cost-of-living issues. 

Trudeau emphasized the importance of building more homes faster to address the housing shortage and make it fairer for younger generations. The federal government will allocate $1 billion directly to cities for urgent infrastructure needs, with the remaining $5 billion allocated to agreements with provinces and territories to support long-term priorities. 

Municipalities have been urging the federal government to commit more funds to infrastructure, stating that communities cannot significantly ramp up homebuilding without water supply and roads.

Source: Financial Post

Housing Crisis Will Persist on Tradespeople Shortage, CBRE Says

Canada’s housing shortage is a major issue, with a lack of skilled tradespeople and rapid population growth driving up prices. The country needs an additional 3.5 million homes, which would require more than doubling its pace of construction, according to a 2022 study from Canada’s national housing agency. 

Paul Morassutti, CBRE Group Inc.’s chairman in Canada, said that the country will likely not hit the targets for housing, as there are not enough trades to physically build the units. He called for policymakers to address the crisis, as supply-demand imbalances have worsened and may even rise once buyers return to the market. 

The scale of the problem is massive, and if left unaddressed, the damage to the social and economic fabric will only worsen.

Source: Financial Post

Canadian Housing Starts Rose 14% in February, CMHC Says

Canada’s housing starts increased by 14% in February, reaching 245,468 units compared to January’s 243,176 units. The six-month trend also saw a slight 0.4% gain, from 244,638 units in January to 245,665 units in February. 

The actual number of housing starts in urban centres of 10,000 population and over increased by 11% to 17,495 units in February, driven by higher multi-unit starts. Single-detached starts decreased by 14%. Toronto and Vancouver saw higher multi-unit starts, while Montreal saw a decrease in actual starts due to lower housing segments.

Key Facts:

  • The monthly SAAR of total urban (centres 10,000 population and over) housing starts increased 15%, with 238,633 units recorded. Multi-unit urban starts increased 20% to 196,392 units, while single-detached urban starts decreased 2% to 42,241 units.
  • The rural starts monthly SAAR estimate was 14,835 units.
  • Total SAAR housing starts were up 79% in Vancouver and 15% in Toronto, driven by significant increases in multi-unit starts. Montreal declined 31% due to sizeable decreases in both single-detached and multi-unit starts.
  • Monthly Housing Starts and Other Construction Data are accessible in English and French on our website and the CMHC Housing Market Information Portal.
  • Housing starts data is available on the eleventh business day each month. We will release the March housing starts data on April 16 at 8:15 AM ET.
  • CMHC uses the trend measure as a complement to the monthly SAAR of housing starts to account for considerable swings in monthly estimates and to obtain a clearer picture of upcoming new housing supply. In some situations, analyzing only SAAR data can be misleading, as the multi-unit segment largely drives the market and can vary significantly from one month to the next.
  • Definitions and methodology to better understand the foundations of the Starts and Completions and Market Absorption surveys.

Source: Global News
Source: CMHC

Slow February Home Sales Signal ‘Things Are About to Pick Up’: CREA

The Canadian Real Estate Association (CREA) reported a 3.1% decrease in home sales in February from January, indicating a slowdown before a spring storm. The national average home price was $685,809, up 3.5% year over year. The number of newly listed properties rose 1.6% ahead of the busy spring market. The ratio of sales to new listings eased to 55.6% last month, indicating a relative balance between buyers and sellers.

CREA chair Larry Cerqua said that the busyness of the season depends on whether sidelined buyers are waiting for hints of interest rate cuts from the Bank of Canada or just for listings to pick up in the spring. Policymakers at the Bank of Canada have been mum on the timeline for interest rate cuts, which affect the cost of borrowing and the size of mortgages Canadians can afford. However, economists expect easing to the policy rate at some point this year, with cuts potentially beginning in the late spring or early summer.

TD Bank economist Rishi Sondhi said that February home sales were likely weighed down by a creeping up in the bonds market since the start of 2024. Rising bond yields, which inform fixed mortgage rates, are tied to expectations that the Bank of Canada will keep its policy rate higher for longer. Overall sales activity is up nearly 20% from February last year but remains roughly five percent below the 10-year average.

Despite the volatile past few months of sales figures, the housing market is still tracking for solid gains in the first quarter of the year. Subdued sales levels in Ontario, British Columbia, and Quebec are keeping national figures down, and there is likely significant pent-up demand in these markets.

BMO chief economist Doug Porter believes the housing market is finding a bottom after two years of cooling. Rapid population growth will fuel demand when the Bank of Canada starts lowering its policy rate, making it easier for sidelined buyers to enter the market. A drop of even a quarter of a percentage point in the Bank of Canada’s policy rate would get 10% of prospective buyers to resume their search. Nearly one in five (18%) are waiting for cuts of between 50 and 100 basis points, while 23% need a steeper drop before getting back into the market.

Source: Global News
Source: Globe and Mail
Source: The Star
Source: CREA