After five straight holds of the Bank of Canada鈥檚 key interest rate that followed its hiking cycle of more than a year, economists say a rebound awaits the national housing market 鈥� but don鈥檛 expect a big surge just yet.
The central bank is expected to again hold its key rate steady when it announces its decision Wednesday, but it鈥檚 unclear what direction it will take next.
With modest cuts likely in store later this year 鈥� some forecasts call for those to begin as soon as June 鈥� it could take months before buyers are confident enough to come crawling back from the sidelines.
That uncertainty may keep some buyers cautious throughout the spring, said TD Bank economist Rishi Sondhi.
鈥淚 think it鈥檚 a bit of a muddy backdrop there and maybe that might be restraining some of the activity,鈥� he said.
But Sondhi said Canada鈥檚 housing market is 鈥渁kin to a bit of a coiled spring,鈥� noting sales activity and prices typically jump when there鈥檚 a shift 鈥渢hat jolts the market鈥� such as an interest rate cut.
鈥淭here鈥檚 significant pent-up demand out there, particularly in Ontario and B.C., so it just takes a bit of a spark.鈥�
In its latest report on national home sales and pricing data, the Canadian Real Estate Association hinted that February could mark 鈥渢he last relatively uneventful month of the year.鈥�
鈥淎fter two years of mostly quiet resale housing activity, there鈥檚 a feeling that things are about to pick up,鈥� CREA chair Larry Cerqua said in a statement last month.
鈥淎t this point, it鈥檚 hard to know whether buyers are going to wait for a signal from the Bank of Canada or whether they鈥檙e just waiting for the spring listings to hit the market.鈥�
Greater Toronto Area-Realtor Dean Artenosi called the current moment a 鈥渢ipping point where the worst is behind us.鈥� He said the central bank has signalled that interest rates have 鈥渓evelled out鈥� through its consecutive rate holds, and that has made buyers more optimistic.
鈥淭he mood and the mindset, the psyche, is that we鈥檙e back to a normal market,鈥� said Artenosi, co-owner of Coldwell Banker The Real Estate Centre Brokerage.
鈥淧eople have gotten comfortable 鈥� and are used to making the payments at these higher rates. Buyers are starting to come back into the marketplace. Obviously there鈥檚 talk of the rates starting to come down now and we鈥檙e seeing multiple offers again on some properties.鈥�
Out West, activity cooled in March after 2024 got off to a red-hot start, said Tim Hill with Re/Max All Points Realty.
The Vancouver real estate agent said many of his clients now find themselves in a holding pattern while waiting for rates to fall. He said others are weighing the pros and cons of buying before that point in time, which is expected to spur price growth amid lower borrowing costs.
鈥淲e can all feel pretty confident that (the central bank is) not making a change yet, as much as people might wish. But maybe we鈥檒l get some more information in their press release of where their heads are at and when we might see that Bank of Canada rate come down,鈥� said Hill.
鈥淔or me, I鈥檓 feeling now that we鈥檝e seen this kind of lull, I think April is going to be a really tell-tale month for how the rest of the spring goes.鈥�
RBC assistant chief economist Robert Hogue predicted a 鈥済radual鈥� rebound later this year as the central bank鈥檚 rate-cutting cycle progresses, rather than a major uptick in activity following its first reduction.
He said there are some exceptions to that forecast, notably the Calgary market, which has remained strong despite elevated rates. Increased demand from interprovincial migration and below-average inventory have kept the market tight in that city, according to the local real estate board.
鈥淭hat鈥檚 a market that continues to be pretty robust and we don鈥檛 see that changing,鈥� Hogue said.
Despite pent-up demand, affordability remains a major issue in markets such as Toronto, Vancouver and Montreal.
鈥淚 don鈥檛 see it as much of an issue of being prudent or cautious, but more in terms of the budget constraint to buyers,鈥� said Hogue.
He said Canada could see a 鈥渟eries of small waves鈥� in some markets within the next few months, where activity picks up as some try to get ahead of interest rate cuts.
鈥淔or those mini-waves to be sustained, you need a critical mass of buyers making their way back into the market,鈥� Hogue said.
鈥淔or that, our view remains that we need to see a significant drop in mortgage rates, which I think is more of a second half of 2024 story than the spring market.鈥�
Artenosi said he鈥檚 urging his clients not to wait. While borrowing conditions could be more favourable in the months to come, he warned of other factors, including Canada鈥檚 growing population, that could make it more difficult to buy at an affordable price.
Statistics Canada鈥檚 live population tracker showed Canada鈥檚 population topped 41 million in late March, less than a year after hitting the 40-million milestone.
鈥淧laying the waiting game is a mistake,鈥� said Artenosi, who added those holding out may increasingly find themselves in bidding wars.
鈥淭here鈥檚 going to be no perfect scenario.鈥�
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