The Canada real estate market showed signs of life in May when sales increased for the first time in about six months, which led some to wait for the long -awaited change to finally have arrived.
But some economists warn that this “respite” will be short -lived and housing recession will continue throughout the year.
“Unless an immediate agreement is reached to eliminate most of the Us Canada rates, we hope that the fall in housing will extend until the end of 2025,” wrote Tony Stillo, director of Canada Economy for Oxford Economics and Michael Davenport, senior economist.
The real estate market is still weak, they argue. National sales in May, although compared to the previous month, were still around 16 percent below the average of five years and the reference price of the MLS was reduced for sixth consecutive month, 3.2 percent less year after year.
The Bank of Canada delivered a great loan relief to Canadians during the past year, reducing its reference interest rate from 5 to 2.75 percent. But the expected rally in the real estate market never materialized because the president of the United States, Donald Trump, began a tariff war.
Stilo and Davenport said that Trump’s commercial assault threatens to deepen the recession of the Canadian real estate market, since buyers and vendors remain “paralyzed” by uncertainty.
“The bad affordability, the weak confidence and losses of recession jobs now probably run, in addition to the winds against a small population, they will continue to weigh on demand,” they said.
They expect housing prices to fall from 8 to 10 percent cumulative by the end of the year as housing sales in anguish increase, which increases the supply.
It remains to be seen whether or not they are right, but the June data of the Regional Real Estate Boards, which now begin to leave, do not look as optimistic as May.
Yesterday, Calgary, the first of the meetings to inform, said that housing sales fell 16.5 percent last month since the previous year as the new listings increased. The city inventory reached 6,941 houses for sale, 83.2 percent more than last year.
The first data of the digital real estate agent Wahi.com also point to a “June less than holiday” for the Metropolitan Area of ​​Toronto, said Robert Mclister’s strategist of Mortgagelogic.News.
Sales decreased more than 12 percent compared to last year, and prices fell by 1.5 percent compared to the previous month. Total active listings increased almost 35 percent compared to last year.
The chances of more relief in the mortgage rate relive the market are also mitigated.
Oxford Economics expects the Bank of Canada to maintain its stable policy rate by 2.75 percent in “the predictable future”, while the increase in government bonds produces fixed mortgage rates.
He expects the five -year mortgage rate to increase 5.1 percent in the second quarter to 5.5 percent by the end of the year.
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When it comes to tourists in Canada, Americans lead the lists. American visitors represented four out of five non -resident trips in 2024, spending a record of $ 15 billion, more than all other combined nations, says a TD Economics report.
However, its number was reduced this year as commercial tensions, economic uncertainty and a weak US dollar keep more Americans away. Automobile trips for US residents to Canada fell 8.4 percent in May, the fourth consecutive month of decrease.
TD Economics estimates that American expenditure in Canada will fall from 5 to 10 percent this year, a loss of approximately $ 1 billion.
International travelers from other countries are collecting part of the slack. The visits of the United Kingdom increased by 14 percent and Mexico’s visits increased by 22 percent in April. In May, China’s travelers increased 11 percent compared to the previous year.
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Is it real estate is really the best place to park your money? The Robert Mclister Mortgage Strata analyzes the numbers and reaches some surprising conclusions. Continue reading
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Today’s position was written by Pamela Heaven with additional reports of Financial Post, Canadian Press and Bloomberg.
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