We apologize, but this video has failed to load.

Try refreshing your browser, or
tap here to see other videos from our team.

Posthaste: Canada's housing market could be in for a 'bumpy recovery' Back to video

We apologize, but this video has failed to load.

Try refreshing your browser, or
tap here to see other videos from our team.

Play Video

New data on Canada’s housing market out yesterday suggested prices might be nearing a bottom, but the recovery won’t be all smooth sailing, say economists.

The national MLS Home Price Index in February was flat month over month, ending a run of five declines that began last fall.

The shift is noteworthy, said the Canadian Real Estate Association, considering that prices dropped 1.3 per cent from December to January.

Such a sudden increase has only been seen four times in the past 20 years, all of them when “demand was coming off the sidelines,” said CREA.

“After two years of mostly quiet resale housing activity there’s a feeling that things are about to pick up,” said CREA chair Larry Cerqua.

But while improving sentiment — likely fuelled by the prospect of Bank of Canada interest rate cuts — halted the national price declines, it has not yet produced a recovery in activity, said Robert Hogue, an economist with Royal Bank of Canada. 

Home sales fell 3.1 per cent in Canada between January and February, reversing about a quarter of the gains in the previous two months. With February sales still about 11 per cent below the 10-year average, the market remains subdued, he said.

Activity did pick up in Quebec and eastward. Montreal home sales were up 6.1 per cent and sales soared 27 per cent in Fredericton and 12 per cent in Saint John.

Further west, however, sales slumped, with Toronto down 12 per cent month over month, Vancouver down 7.3 per cent and Calgary off 6.6 per cent.

New listings rose for the second month in a row, suggesting that sellers are feeling more confidant. Hogue suspects some decided to hold off in the fall, and are now trying to get an early jump on the spring market.

“We think February’s developments point to a bumpy ride for the market in the months ahead,” said Hogue.

“While the tightening of demand-supply conditions since December has paved the way for modest price appreciation, resales are likely to bounce around amid a standoff between buyers and sellers.”

That standoff he refers to is “very different perspectives” between buyers and sellers.

RBC expects sellers will come to the market with firm price expectations, believing they hold the upper hand in bargaining because of the tightening of demand-supply conditions and the end of the price correction.

Buyers, still waiting for interest rate cuts, will continue to be held back by their budgets.

“We expect these positions will lead to a standoff between the two parties in many markets, keeping deal making subdued until interest rate cuts boost buyers’ purchasing budget later this year,” he said.

 Sign up here to get Posthaste delivered straight to your inbox.

Canadian home prices in February remained unchanged from the previous month, ending a streak of five consecutive declines that began in the fall, the latest data from the Canadian Real Estate Association, (CREA) said Monday.

Shaun Cathcart, CREA’s senior economist, said February might be the last uneventful month this year.

“With so much demand having piled up on the sidelines, the story will likely be less about the exact timing of interest rate cuts and more about how many homes come up for sale this year,” he said in the release.

Read more from the Financial Post’s Shantaé Campbell

• Statistics Canada will release its latest reading for inflation today in the consumer price index for February. Inflation tumbled to 2.9 per cent in January, down from 3.4 per cent in December.
• New Brunswick tables its budget
• United States Federal Open Market Committee meeting begins
• Today’s Data: U.S. building permits and housing starts
• Earnings: Orla Mining Ltd.

• Get ready to ‘drift’ into the stock market, but with some protections in place
  
• What ‘open banking’ would mean to you

Trust reporting rules first proposed in the 2018 federal budget are finally taking effect for the 2023 tax year. They require most trusts to file a T3 tax and information return with expanded reporting on who the settlors, trustees and beneficiaries are. Tax expert Kim Moody says that may sound benign, but the amount of information needed to be disclosed can be daunting. Find out more

Are you worried about having enough for retirement? Do you need to adjust your portfolio? Are you wondering how to make ends meet? Drop us a line at aholloway@postmedia.com with your contact info and the general gist of your problem and we’ll try to find some experts to help you out while writing a Family Finance story about it (we’ll keep your name out of it, of course). If you have a simpler question, the crack team at FP Answers led by Julie Cazzin or one of our columnists can give it a shot.

McLister on Mortgages

Want to learn more about mortgages? Mortgage strategist Robert McLister’s Financial Post column can help navigate the complex sector, from the latest trends to financing opportunities you won’t want to miss. Read them here 

Today’s Posthaste was written by Pamela Heaven with additional reporting from Financial Post staff, The Canadian Press and Bloomberg.

Have a story idea, pitch, embargoed report, or a suggestion for this newsletter? Email us at posthaste@postmedia.com.

Bookmark our website and support our journalism: Don’t miss the business news you need to know — add financialpost.com to your bookmarks and sign up for our newsletters financialpost.com.