RBC report shows continued challenges with affordability
February brought a reality check for Canada's housing market, as several major cities experienced drops in home resales, hinting at persisting affordability challenges despite signs of recovery.
According to RBC's Special Housing Report, these setbacks partly reversed gains made in December and January, with more sellers entering markets like Vancouver, the Fraser Valley, Edmonton, Hamilton, and Montreal.
“The earlier tightening in demand-supply conditions in December and January no doubt gave sellers more sway in setting prices. We think a vigorous, sustained recovery won’t take shape until interest rates fall more meaningfully—something we peg for the second half of 2024,” RBC’s Robert Hogue wrote.
In Toronto, February saw a reversal in sales increases, pointing to ongoing uncertainty fuelled by fluctuating interest rates and affordability concerns. Although prices inched up, the market remains relatively flat, posing significant challenges for buyers.
Montreal's market continued its upward trajectory, with home resales increasing and prices showing signs of recovery for single-family homes and condo apartments. However, a full rebound is expected to be gradual and uneven.
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Although Vancouver witnessed a return of sellers to the market, cautious buyers resulted in a slump in home resales. Affordability issues persist, limiting near-term growth potential even with a slight price appreciation.
In Calgary, while there was a slowdown in February, home resales remained well above pre-pandemic levels. Strong housing demand persists, but affordability remains a concern. Prices in Calgary have seen the most significant rise among the tracked markets, with stable trends expected to continue in the near term.
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