Canadian Housing Market Trends: Prices Stabilize, Expectations of Rate Cuts Grow—and the Government Makes Promises

The Canadian housing market is in flux. Recently, there have been tentative signs the market may be turning a corner from the recent malaise. The Canadian Real Estate Association (CREA) noted in its March report that benchmark nationwide prices finally stopped falling in February after five months of declines. Prices were flat month-over-month, but up 0.8% year-over-year. Sales, meanwhile, dipped compared to January, but were 19.7% higher than February of 2023, putting them just 4% shy of the 10-year average.

According to the CREA:

The fact that prices were unchanged from January to February was noteworthy given they had dropped 1.3% from December to January. Considering how stable the seasonally adjusted MLS® HPI tends to be, shifts this abrupt are exceedingly rare…There have only been three other times in the last 20 years that have shared a sudden improvement or increase in the month-over-month percentage change from one month to the next of this size; all at various points in the last four years when demand was coming off the sidelines.


The jury is still out on the crucial Spring housing market, but there are some reasons for optimism. For one thing, brokerage firm Re/Max observes that most of the 10 largest residential markets saw strong increases in luxury home sales in the first two months of the year—a sign, perhaps, of good things to come in the overall market.

In the Toronto housing market, average benchmark prices hit $1.12 million in March, a slight increase on a year-over-year basis. Sales fell 4.5 percent, though the Toronto Regional Real Estate Board (TRREB) made the point that part of this decline could be attributed to the Good Friday statutory holiday. TRREB’s chief economist expects a very strong Spring market, while others were more cautious. Desjardins economist Marc Desormeaux told Canadian Mortgage Professional that the market didn’t seem especially robust, given that prices rose less than the rate of inflation.

Hope for Bank of Canada Rate Cuts

There is a significant amount of anticipation regarding the Bank of Canada’s next moves on the monetary policy front. For those would-be homebuyers sitting on the sidelines, indications of coming interest rate cuts will be welcome news. In this regard, lower-than-expected inflation in February may prove crucial. The Consumer Price Index only rose 2.8% vs. the same month last year, lower than economists had expected, and the second month where the CPI came in below forecasts. Should March’s reading also suggest a continuation of this disinflationary trend, the Bank of Canada may feel confident that inflation is no longer a problem, and they can start cutting rates.

April 10 is the next meeting of the central bank’s Governing Council. Although a rate cut is not forecasted by most observers at this meeting, there are increasing expectations that a summer easing could be in the cards. As Global News put it after the soft February CPI data:

Money markets increased their bets for a first 25 basis point rate cut in June to more than 75 per cent, from 50 per cent before the inflation data, according to Reuters. The bets for an April rate cut increased to over 28 per cent from 18 per cent before the numbers were released.

The Federal Government is Making Promises—Lots of Them

It’s no secret that high house prices are an affordability barrier for many Canadians—and in turn, a political problem for the federal Liberals. With the next election expected in 2025 (at the latest), it’s no surprise that the government is making big promises on the housing front. Among other things, the government is promising $6 billion in housing infrastructure and $15 billion for an apartment construction loan program.

Truth be told, housing markets tend to be more affected by monetary policy than fiscal policy. So, while the political promises will garner headlines, the near-term outlook for Canadian house prices is more likely to be affected by what the Bank of Canada does. Stay tuned.

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Smarter Loans Staff

The Smarter Loans Staff is made up of writers, researchers, journalists, business leaders and industry experts who carefully research, analyze and produce Canada's highest quality content when it comes to money matters, on behalf of Smarter Loans. While we cannot possibly name every person involved in the process, we collectively credit them as Smarter Loans Writing Staff. Our work has been featured in the Toronto Star, National Post and many other publications. Today, Smarter Loans is recognized in Canada as the go-to destination for financial education, and was named the "GPS of Fintech Lending" by the Toronto Star in 2019.