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More signs of the beginning of the end of Canada’s housing correction

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of latest numbers They caused a bit of a stir in the Canadian housing market when they came out last week.

“Is the Canadian real estate market adjusting to rising borrowing costs?” asked headline From online realtor Zoocasa.

Home sales rose 1.3% m/m in Oct, the first monthly increase since February. About 60% of the Canadian housing market saw a rise, with new listings rising for the first time in four months. This could indicate that buyers and sellers are tired of sitting on the sidelines and ready to return to the market, he says, Zoocasa. .

“National sales rose for the first time in October since before interest rates started rising last winter,” said Jill Ordill, president of the Canadian Real Estate Association, when the figures were released. “Of course, we knew there was demand, so some people were playing the waiting game as borrowing costs and prices adjusted.”

A trend doesn’t form in a month, but economists also saw some green sprouts in the data.

RBC economist Robert Hoag wrote that October’s monthly increase in home sales could indicate the market is nearing a bottom after falling 36% over the past seven months. increase. in a note.

“The Canadian housing market may be entering the late stages of a cyclical recession.”

Victoria led the country’s gains, with October sales up almost 20% from the previous month. Vancouver, Edmonton, Saskatoon, Winnipeg, Hamilton, St. John and Halifax also posted single-digit sales growth. Toronto and Calgary were broadly flat, while Ottawa was down 2.9% of his, Montreal down 2.4% of him and Quebec City down 1.6%.

Sales were below last year’s levels in most markets.

Randall Bartlett, Desjardins’ senior economic director for Canada, said: “October’s housing data gives us cautious optimism that the worst may be behind us, but the adjustment is still taking time. pointed out.

Scotiabank economist Farrah Omran said it would be interesting to see if the recent increase in sales would spur a return of buyers to the market in the same way that previous declines had kept them off. “If these buyers interpret the October results as a dip, this could mark the beginning of the end of the housing market correction,” she said.

But the turning point of falling prices will delay sales, she said.

Property prices continued to fall, but last month’s drop was the smallest since May, said RBC’s Hogue. The combined MLS house price index fell 1.2% from the previous month and 0.8% from a year ago, its first annual decline in three years. The index is now down 10% from its February peak.

“While we believe the inflection point is still a ways off, it suggests that most of the price correction is likely past, at least across Canada,” Mr. Hoag said.

Ontario and British Columbia saw the biggest gains during the pandemic boom, but continue to see the biggest declines. The largest declines in Ontario’s MLS House Price Index were 22% in Cambridge, 18% in London, 18% in Brantford, 17% in Kitchener-Waterloo, 17% in Kawartha Lakes and Hamilton. Burlington, 17%. In British Columbia, Chilliwack dropped 18% and the Fraser Valley dropped 12%.

Even if the correction is in the late stages, Hogue warned, it doesn’t mean action will heat up again anytime soon — it doesn’t mean rates are stuck high and about to rise.

“This will keep activity quiet for some time, even if it stabilizes near current levels.

Capital Economics says the signs are encouraging, but its economists think it’s too early for all to be clear. Capital also expects to soon have to contend with rising unemployment.

The firm still supports its forecast of a 20% decline in home prices from peak to trough, but acknowledges that the risk to it has increased.


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As today’s graph shows, North America is leading the race to lower inflation, while Canada’s headline rate October was stable at 6.9%, America’s as low as 7.7%.

But inflation continues to rise in other parts of the world, writes BMO chief economist Douglas Porter. His October CPI in the UK saw him top 11%, in Europe at least five economies surpassed him, and in the Netherlands he recorded a blazing 16.8%. On a global scale, BMO chart showCanada is at the bottom end, with Switzerland and Japan, traditionally low-inflation economies, and the special case of China and its COVID lockdown below it.

However, Porter warns that while headline inflation will slow significantly over the next year, underlying inflation will last longer than many expect. “I’m not convinced it will be as dramatic a setback as is commonly believed at this point and will continue to warn of upside risks to the inflation outlook,” he said.


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Today’s Posthaste was written by Pamela Haven, @pamheavenCanadian Press, Thomson Reuters and Bloomberg.

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