After a temporary lull, the real estate market in Canada is heating up again. Sales increased by the thousands in certain areas while prices rose by the tens of thousands in others in May. A leading economist cautions against expecting it to persist. Oxford Economics has cautioned customers that they anticipate this boost to be short-lived and that the current decline in existing property values is just halfway to the lowest they anticipate.
Correction in Canadian Real Estate Put on Hold, Optimism Returns
The housing market in Canada is heating up. In May, sales of previously owned homes saw a 5.1% increase over the previous month, when adjusted for seasonal factors. Despite purchasers having to contend with substantially higher loan rates, unadjusted sales were 1.4% higher than during the previous year. Most Canadian markets had an increase in sales volume, totaling 70%. However, it should be stressed that sales of previously owned homes continue to fall short of their 10-year average.
A Leading Economist in Canada Warns That the Real Estate Downturn Is Far From Over
Excited purchasers rushed into the market as mortgage rates briefly dropped. As a result, house prices have risen by 2.1% in the last month, bringing them within 12% of their all-time peak set in February 2022. Prices increased by 62% from their December 2019 low to their peak in March 2020, even though the rate of new home construction has been far higher than the rate of population expansion.
Given the rise, it seems like not much of a decrease. Stillo and his group believe this is only a temporary setback before the downturn resumes. Stillo makes it clear that he and his team do not believe the housing market downturn in Canada is resolved. Sales activity may go up in the run-up to the Bank of Canada‘s rate announcement in July. Weaker housing demand and more listings are anticipated to re-initiate house price declines as interest rates rise and Canada enters recession, leading to an overall 20-25% peak-to-trough loss from the February 2022 high.