MID-SPRING MARKET 2024 - SEASONAL ACTIVITY RETURNS?

In our last update, we completed a brief projection for the Spring 2024 market. We noted that Buyers may prove more cautious this Spring and less certain of impending rate cuts. Indeed, March of 2024 saw fewer homes sold in the Waterloo Region (596) than any March prior, going back two decades. This represents a 33% drop from the five year average. What we didn’t necessarily foresee was a strong increase in average sales values (monthly averages can produce outliers when more expensive property is sold in higher volume in a particular month). The average sale price in March 2024 was up 3.3% year over year and 6.6% from February 2024. We will watch to see if this trend continues through April.

• see below for analysis on CREA’s latest national report and also the Central Bank of Canada’s latest rate announcement.

The Canadian Real Estate Association report

A new report from CREA shows an increase nationally in listing inventory through the end of March and into April. The National Realtor Association believes that Buyers are remaining impatient on the sidelines and perhaps gaining more acceptance of increased mortgage costs. After two years of rate tightening, house prices have possibly now stabilized.

RECENT BANK OF CANADA RATE ANNOUNCEMENT

On April 10th, the Bank of Canada again announced it would hold its target for the overnight rate at 5% (no cuts). The Central Bank observes that global economic growth may be higher than expected, buoyed by a strong US economy. The BOC also continues to note that high shelter costs are at the core of Canadian inflation. The next rate announcement is scheduled for June 5th. Earlier in the year, many economists were anticipating rate cuts as early as March or April. In the Spring of 2023, there were already calls for interest rate relief. Will the BOC begin cutting rates if the US economy remains strong? It would lower the value of Canadian currency and perhaps cause further complications.

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