Activate your Online Access NowTwo more rate hikes in June and July put a damper on that rally, but this month the Bank paused again. Can we expect to see another bounce in the housing market?
Don’t count on it, says BMO senior economist Robert Kavcic, because this time “the headwinds are stiffer than they were the last time the Bank of Canada stepped aside.” “The Bank of Canada’s September 6th pause will help market psychology, and we wouldn’t fully write off this market given underlying demographic demand, but there are a few reasons why this pause might not provide the same burst it did in the spring,” he wrote in note.In March new listings were the lowest since 2003, because “homeowners didn’t want to, or have to, sell into a down market,” said Kavcic.
Now new listings are surging back to historic norms, up 5.5 per cent in August from last year, and there’s a record number of homes under construction that will make their way onto the market, he said.. In its financial system review earlier this year, the Bank of Canada highlighted concerns about the ability of households to service their debt when mortgages are renewed at much higher rates, with some facing payment increases of up to 40 per cent.
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