Canadian Housing Market Returns to Pre-Pandemic Norms Amidst Rate Hold

Experts Suggest a More Balanced Market Emerges

Canada’s housing sector is increasingly resembling its pre-pandemic state, as the Bank of Canada maintains its interest rates. Economists and real estate analysts point to a rise in available inventory and a more considered approach from buyers as indicators of this shift.

Signs of Stabilization

The market is experiencing a “return to the old normal before the pandemic,” according to **Robert Hogue**, assistant chief economist at RBC. He notes that while inventory is increasing, buyers are also benefiting from more time to make purchasing decisions, a stark contrast to the frenzied pace seen previously.

National home sales saw a modest increase of 2.8 per cent in June, following a 3.5 per cent rise in May, according to the Canadian Real Estate Association (CREA). However, CREA’s senior economist, **Shaun Cathcart**, characterized the national sales figures as a “carbon copy” of May’s data, suggesting a plateau rather than robust growth.

Despite lingering concerns about U.S. trade policies, **Hogue** indicates that Canadian sentiment has improved, fostering renewed interest from some buyers. He anticipates that this positivity, coupled with a stable interest rate environment, will support the market’s long-term recovery.

Psychological Hurdles Remain

While market conditions are normalizing, affordability continues to present a significant challenge. **Mary Sialtsis**, a licensed mortgage broker in Ontario, observes that even financially capable buyers are hesitant to commit, attributing this to a “psychological impact” rather than a lack of purchasing power.

“We still have affordability issues, but I think even for those who have the ability to purchase right now, they’re not. We need them to pull the trigger.”

—Mary Sialtsis, Licensed Mortgage Broker

Sialtsis suggests that a shift in buyer expectations is crucial. She notes that some potential buyers are holding out for better deals, a stance she deems increasingly “unreasonable.” Sellers, too, may need to adjust their asking prices to align with current market comparables.

Adapting to the New Normal

For those looking to enter the housing market, **Hannah Martens**, president of the Canadian Mortgage Brokers Association Atlantic, advises action when ready. “Every mortgage broker that I speak to is busy right now because house prices are high, interest rates aren’t great but people are still buying,” she stated, emphasizing that a “perfect market” is an illusion.

**Anne-Elise C. Allegritti**, director of research and communications at Royal LePage, believes Canadians are adapting to current borrowing rates. “I think Canadians have adapted to this sort of, being roughly the new normal in terms of borrowing rates. Could they go down a little bit more, sure, but I don’t think anyone is expecting them to reach those rock-bottom rates that we saw during COVID and that’s a good thing,” she commented, adding that the current situation represents a “leveling off” rather than an extreme.

A recent report from the Canada Mortgage and Housing Corporation (CMHC) indicated that the national average home price was $759,323 in May 2024, a slight increase from the previous year, underscoring persistent affordability concerns for many (Source: CMHC, May 2024 Housing Market Outlook).

1:01
Throne speech: King Charles says Liberals will work to make Canada’s housing market ‘work better’