Activate your Online Access NowThe year-long winter may be coming to a close in Canada’s housing market, with many economists calling an end or near end to the correction that has seen, following a 1.5 per cent advance in February, the first back-to-back monthly gains since the correction began 12 months ago.“A complete lack of new listings is the big story now,” writes BMO senior economist Robert Kavcic.
New listings, down 5.8 per cent nationally in March, were the lowest for the month in 20 years, said Kavcic, and back then the population was 20 per cent or 8 million people smaller.‘s pause in rate hikes has emboldened buyers back to the market, so why not sellers?Article content Kavcic says in the past, housing downturns that have evolved from a price correction into a crash — like the housing crisis in the United States in 2008 or southern Ontario in the 1990s — have been driven by forced selling.Potential sellers don’t want to sell in a downmarket and this time they don’t have to, thanks to a strong job market and limited mortgage delinquencies.
Banks are giving homeowners on variable-rate mortgages a buffer by stretching out amortizations instead of hiking payments as rates have risen from below 2 per cent to above 6 per cent during the Bank of Canada’s aggressive rate hiking cycle over the past year. The Office of the Superintendent of Financial Institutions made sure most buyers were stress tested. Even those who took out mortgages at 1.5 per cent had to prove they could handle rates in the 4.75 per cent to 5.25 per cent range or higher.
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